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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Share exchange: effect of TCGA92/S135: computation

If a shareholder has separate Section 104 holdings of shares in Company X and Company Y, and both these companies are later taken over by Company Z in exchange for the issue of its own shares, all the Z shares issued in exchange will form a single pool.

If however the shares in Company Y had been acquired in, say, 1980 the Company Z shares would remain as two separate pools in the hands of the shareholder - as a Section 104 holding (reflecting the Company X shares), and a 1982 holding (reflecting the Company Y shares).