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HMRC internal manual

Capital Gains Manual

Conversion of securities: compensation stock: held over gain

TCGA92/S134 applies to compulsory acquisitions which take place after 7 April 1976. The exchange of gilts for shares or securities is not treated as a disposal. Instead you compute the gain that would have arisen if the original shares or securities had been sold at their market value, TCGA92/S134 (2)(a). That gain or loss is held over and released on a subsequent disposal of all or part of the gilts. The gilts exemption does not apply to the release of this gain, TCGA92/S134 (2)(b). A part disposal of the gilts will release an appropriate proportion of the gain.