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HMRC internal manual

Capital Gains Manual

Deferred consideration: shares and securities: rights acquired pre-26/4/88

The method of giving relief in these cases is different. It is not necessary to value the right to receive the deferred consideration. The initial computation of the gain on the disposal of shares or debentures should be made on the basis that

  • the deferred consideration is ascertainable as the maximum amount
  • the deferred consideration will be received in cash.

This computation may have to be adjusted when each tranche of deferred consideration is received.

  • Allow relief under TCGA92/S135 or TCGA92/S116 on any deferred consideration which is received in the form of shares or debentures.
  • Allow relief under TCGA92/S48 if the maximum amount is not received.

The final computation should show the actual proceeds received, with appropriate treatment under TCGA92/S135 (or TCGA92/S116) of any shares or debentures (including QCBs) received.

In many cases it will be appropriate to allow the payment of tax by instalments under TCGA92/S280 (see CG14910+ for full instructions).