Reorganisations of share capital: capital reduction
Although TCGA92/S126(1) includes a reduction of a company’s share capital in the definition of reorganisation, there is a significant exception in TCGA92/S126(3). This provides that the reference to a reduction of share capital does not include the paying off of redeemable share capital. If redeemable share capital is paid off it is not a reorganisation of share capital and the shareholders are treated as disposing of those shares unless
- either the shares are redeemed in a liquidation (in which case there will still be a disposal by the shareholders, see CG40430)
- or the shares are redeemed for consideration in the form of an issue of new shares or debentures.