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HMRC internal manual

Capital Gains Manual

Share identification rules for capital gains tax from 6.4.2008: stock dividends


A stock dividend before 6 April 1998 which is treated as income under ICTA88/S249 is a share reorganisation as defined in TCGA92/S126. Stock dividends within Section 249 paid on or after 6 April 1998 are not treated as share reorganisations. Instead new TCGA92/S142 treats them as a new acquisition of shares, with the cost of acquisition being the `appropriate amount in cash’ under Section 249.

Further guidance on stock dividends is at CG58750+, and at CG33800+ for stock dividends paid in respect of shares held by trustees. Guidance on the income tax treatment is at CTM17005+.