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HMRC internal manual

Capital Gains Manual

Demergers: CGT treatment: trustees: indirect demergers

Provided that the issued shares are received as capital, in the case of an indirect demerger trustees of all kinds are treated for Capital Gains Tax in the same way as individuals, see CG33920 above. If exceptionally the issued shares are received as income of the trust, then the same treatment applies as for direct demergers, see CG33931+, subject to the following paragraph.

If exceptionally there has been an indirect demerger in such circumstances that the issued shares are received as income, CG33931 applies with one difference; because these shares are issued by the transferee company, there is no corresponding disposal and therefore TCGA92/S17 does not apply, and the cost to the life tenant is therefore nil, see CG14550+.