Taxation of Chargeable Gains Act 1992

[F1 236F Reorganisation of share capital involving employee shareholder shares U.K.

(1) Section 127 (equation of original shares and new holding on reorganisation) does not apply to exempt employee shareholder shares.

[F2 (1A) Subsection (1B) applies where—

(a) an exempt employee shareholder share (“the original EES share”) is held by a person (“P”) before, and is concerned in, a reorganisation, and

(b) the original EES share is disposed of on the reorganisation.

(1B) P is to be treated as if the original EES share were disposed of for consideration of an amount determined in accordance with subsections (1D) to (1H) (the “relevant amount”).

(1C) In this section “notional gain” means the gain, if any, that would accrue to P if the original EES share were disposed of on the reorganisation for consideration of an amount equal to the market value of the share.

(1D) Subsections (1E) to (1G) apply where a notional gain would accrue to P on the disposal of the original EES share.

(1E) Where the whole of the notional gain would be a chargeable gain by virtue of section 236B(1A), the relevant amount is the amount that would secure that on the disposal neither a gain nor a loss would accrue to P.

(1F) Where part (but not the whole) of the notional gain would be a chargeable gain by virtue of section 236B(1A), the relevant amount is the maximum amount, not exceeding the market value of the share, that would secure that on the disposal no chargeable gain would accrue to P.

(1G) Where no part of the notional gain would be a chargeable gain by virtue of section 236B(1A), the relevant amount is equal to the market value of the original EES share at the time of the disposal.

(1H) Where no notional gain would accrue to P on the disposal of the original EES share, the relevant amount is the amount that would secure that on the disposal neither a gain nor a loss would accrue to P.

(1I) In determining for the purposes of this section whether any part of a notional gain is a chargeable gain by virtue of section 236B(1A), subsection (1B) is to be disregarded.

(1J) Where more than one original EES share is disposed of by P on a reorganisation, references in this section to the disposal of the original EES share are to be treated as references to the disposal of all of the original EES shares disposed of on the reorganisation.

(1K) In this section “reorganisation” has the same meaning as in section 127.]

(2) The [F3 references in this section to section 127 include] that section as applied by sections 135 and 136 (other company reconstructions).]

Textual Amendments

F1 Ss. 236B-236G and cross-heading inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 20, 38; S.I. 2013/1755, art. 2

F2 S. 236F(1A)-(1K) inserted (with effect in accordance with s. 88(10) of the amending Act) by Finance Act 2016 (c. 24), s. 88(5)

F3 Words in s. 236F(2) substituted (with effect in accordance with s. 88(10) of the amending Act) by Finance Act 2016 (c. 24), s. 88(6)