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HMRC internal manual

Capital Gains Manual

Disposals by trustees: shares held by trustees: other trusts

If a stock dividend is received by trustees and neither (2) nor (3) of ITTOIA05/S410 apply, then there is no liability to Income Tax in respect of the receipt. TCGA92/S142 does not apply, and this is a simple reorganization of shares falling within Section 126, see CG51700+, with no consideration given. The treatment for Capital Gains Tax purposes is therefore that of a conventional bonus issue, see CG51746. If the trustees then chose to or had to distribute the stock dividend shares to one or more of the beneficiaries, that would be a disposal by them at market value, with the appropriate identification rules in CG51550+ applying.