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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Securities: Accrued Income Scheme: conversion of securities

Any accrued amount received is treated as first reducing any Capital Gains Tax consideration the taxpayer receives or is deemed to receive on the conversion or exchange. Normally a straightforward conversion or exchange would not involve the receipt of any consideration. Any balance of the accrued amount is treated as consideration given at the time of the conversion or exchange. Therefore, the taxpayer will get relief for any amount which has been taxed under the Accrued Income Scheme. The ordinary rules of TCGA92/S128 apply to the payment of the consideration, see CG51820+. Indexation allowance is given from the date of the reorganisation, TCGA92/S131, see CG51860.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.