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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Restrictions: pre-entry loss: time-apportionment: reorganisations


The general rule for reorganisations in TCGA92/S127 is that a reorganisation is not treated as involving any disposal or acquisition. 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 at the same time, and for the same consideration, as the original shares were acquired. So if some or all of the shares or securities held before and involved in a reorganisation were acquired before entry into the relevant group, the new holding includes or consists of pre-entry assets.

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.

FA11/S46 and FA11/SCH11 greatly simplified the rules in TCGA92/SCH7A for the deduction of losses on or after 19 July 2011. See CG47400+ for guidance on loss streaming from that date.