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HMRC internal manual

Capital Gains Manual

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

To prevent this result TCGA92/S183 (1)(b) and (2) provide that if

  • on a reorganisation taking place on or after 15 March 1988
  • a company exchanges a debt on a security or redeemable preference shares for ordinary shares, and
  • the provisions restricting indexation would have applied if the company had disposed of the debt or the redeemable preference shares at the time of the reorganisation

the indexation allowance available on the disposal of the ordinary shares is reduced by a just and reasonable amount. In this situation it would be appropriate to allow indexation only from the date of the exchange.