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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Shares and securities: company reconstructions and amalgamations

Chapter 4, CG52500+, deals with company reconstructions and amalgamations. These are transactions in which one company takes over another company or the business of another company. The commonest example is a share exchange in which one company acquires the shares in another company in exchange for the issue of its own shares. These transactions are treated as though they were share reorganisations in the shareholders’ hands. If the transactions include the transfer of a company’s business to another company these can be effected on a no gain/no loss basis.

Chapter 4, at CG5300+, also deals with the exemption from charge of gains made by companies on disposals of substantial shareholdings. This exemption, introduced with effect from 1 April 2002, is in Schedule 7AC TCGA.