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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Groups: indexation allowance restriction: share reorganisations

TCGA92/S183 (1) (b) & TCGA92/S183 (2)

If a company exchanges shares or securities for other shares or securities in a reorganisation to which TCGA92/S127 applies, there is no disposal or acquisition at the time of the exchange. Instead the original shares (taken as a single asset) and the new holding (taken as a single asset) are treated as the same asset acquired as the original shares were acquired. In determining whether the provisions restricting indexation apply on a disposal of the new holding, TCGA92/S183 (1)(b) applies the various tests in relation to the old holding, as if the old holding were the subject of the disposal.


In 1986 company X acquires 1,000 A ordinary shares in company Y. In 1989 company X exchanges the A shares for 2,000 B ordinary shares. In 1990 company X disposes of the shares. The companies are linked throughout. The exchange is treated as a reorganisation within TCGA92/S127.In determining whether the provisions apply on the disposal of the B ordinary shares (the new holding) the relevant tests apply to the acquisition of the A ordinary shares (the original shares) in 1986.