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HMRC internal manual

Capital Gains Manual

From:
HM Revenue & Customs
Published
12 March 2016
Updated:
22 May 2026 - See all updates

CG55030 - Conversion of securities: small premiums

TCGA92/S133

A conversion of securities may include the payment of a cash premium. If the premium is small compared with the value of the converted securities the payment is treated in the same way as a small capital distribution, see CG57835+.

For further instructions on the meaning of small see CG57835.

The operation of TCGA92/S133 depends upon whether the premium is greater than the allowable expenditure on the holding of securities.

  • If the payment is equal to or less than the relevant allowable expenditure the payment is not treated as a disposal. The relevant allowable expenditure is reduced by the amount of the premium, TCGA92/S133 (2).
  • If the payment is greater than the relevant allowable expenditure the taxpayer can elect to have the premium reduced by the amount of the relevant allowable expenditure. The relevant allowable expenditure cannot be set off against any future disposal, TCGA92/S133 (4).