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HMRC internal manual

Capital Gains Manual

Capital loss streaming from 19 July 2011: company changing group on a no gain/no loss transfer


A company may leave one group and join another on a disposal of shares or securities which is a no gain/no loss disposal for capital gains purposes. This will not lead to a restriction of losses that accrued before the change.

This rule applies both where the disposal of shares or securities is of that of the company with the accrued losses and where a company with accrued losses changes group as a result of a no gain/no loss disposal of shares in another company.

The no gain/no loss disposals to which the provisions apply are listed in TCGA92/S288(3A). The no gain/no loss rule in TCGA92/S139, dealing with company reconstructions and amalgamations, is of particular relevance.


J is the principal company of a group and has a 100% subsidiary K; K has a 100% subsidiary L. In a scheme of reconstruction J transfers its shares in K to company W, which is not a member of the J group. The share disposal is at no gain/no loss under TCGA92/S139. As a consequence both K and L leave the J group and join the W group. Any losses that had accrued to either K or L before they joined the W group will not be restricted on this change of group membership.

Note: Additional rules relating to loss buying were enacted in FA 2006. See CG47020+ for guidance on the rules which apply in priority to TCGA92/SCH7A for accounting periods ending on or after 5 December 2005.