Income Tax (Earnings and Pensions) Act 2003

Company reconstructions

86 (1) In this Part of this Schedule a “company reconstruction” means a transaction to which this paragraph applies.

(2) This paragraph applies to a transaction which occurs in relation to any of a participant’s plan shares (“the original holding”) and—

(a) results in a new holding being equated with the original holding for the purposes of capital gains tax, or

(b) would have that result but for the fact that what would be the new holding consists of or includes a qualifying corporate bond.

(3) But where an excluded issue of shares is made—

(a) that issue of shares does not by itself count as a transaction within sub-paragraph (2); and

(b) if made as part of a transaction within that sub-paragraph (that is, as part of a company reconstruction), the shares issued are to be regarded as not forming part of the new holding.

(4) An “excluded issue of shares” means an issue of shares of any of the following descriptions (in respect of which a charge to income tax arises)—

(a) redeemable shares or securities issued as mentioned in section 209(2)(c) of ICTA (distributions);

(b) share capital issued in circumstances such that section 210(1) of ICTA (bonus issues) applies;

(c) share capital to which section 249 of ICTA (stock dividends) applies.