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HMRC internal manual

Capital Gains Manual

Substantial shareholdings exemption: introduction - interaction with other legislation


Part 5 of Schedule 7AC TCGA 1992 (paragraphs 32 to 39) contains provisions setting out how the substantial shareholdings exemption regime interacts with other legislation. Guidance on this is organised as follows:

CG53205 Meaning of chargeable shares or assets
CG53210 Negligible value claims
CG53215 Reorganisations involving held over gain - section 116(10)
CG53220 Recovery of postponed charge - section 140(4)
CG53225 Appropriation of asset to trading stock
CG53230 Recovery of held over gain - section 165
CG53235 Degrouping - time of deemed disposal & reacquisition
CG53240 Effect of FOREX and loan relationships matching regulations



Although not in Part 5, paragraph 4 Schedule 7AC TCGA 1992 also has a major impact on how the substantial shareholdings exemption regime interacts with various ‘no disposal’ provisions in the TCGA - sections 116(10), 127 and 192(2)(a). Simplifying somewhat,


  • if these sections would normally result in a transaction being treated as if it did not involve a disposal of shares, but
  • should there have been a disposal any gain accruing on that disposal would have been exempt under Part 1 of Schedule 7AC

the no disposal treatment is disapplied so that an exempt gain accrues instead. Guidance on paragraph 4 is at CG53170.