Inheritance Tax Act 1984

135 Reorganisation of share capital, etc. U.K.

(1) This section has effect where the transferred property consists of shares in relation to which there occurs before the relevant date a transaction to which [F1 127 of the 1992 Act] applies or would apply but for section [F2 134] of that Act, that is to say—

(a) a reorganisation within the meaning of section [F2 126(1)] of that Act,

(b) the conversion of securities within the meaning of section [F2 132] of that Act,

(c) the issue by a company of shares in exchange for shares in another company in such circumstances that section [F2 135] of that Act applies, or

(d) the issue by a company of shares under such an arrangement as is referred to in section [F2 136]of that Act,

or any transaction relating to a unit trust scheme which corresponds to any of the transactions referred to in paragraph (a) to (d) above and to which section [F2 127] of that Act applies by virtue of section [F2 99] of that Act.

(2) In the following provisions of this section “the original shares” and “the new holding” shall be construed in accordance with section [F2 126(1)].

(3) Where this section has effect the original shares and the new holding shall be treated as the same property for the purposes of this Chapter.

(4) Where this section has effect and, as part of or in connection with the transaction concerned, the transferee or his spouse [F3 or civil partner] becomes liable to give any consideration for the new holding or any part of it, then for the purposes of section 131 above the market value of the transferred property on the relevant date shall (except where apart from this section it reflects the liability) be taken to be reduced by an amount equal to that consideration.

(5) For the purposes of subsection (4) above, there shall not be treated as consideration given for the new holding or any part of it—

(a) any surrender, cancellation or other alteration of any of the original shares or of the rights attached thereto, or

(b) any consideration consisting of any application, in paying up the new holding or any part of it, of assets of the company concerned or of any dividend or other distribution declared out of those assets but not made.

Textual Amendments

F1 S. 135: "127 of the 1992 Act" substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) for "section 78 of the Capital Gains Tax Act 1979" by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 8(6) (with ss. 60, 101(1), 201(3)).

F2 Words in s. 135 substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 8(6) (with ss. 60, 101(1), 201(3)).

F3 Words in s. 135(4) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 28