Benefits Of The Share For Share Exchange Rules

Share for share exchanges take place when a company issues shares to an individual in exchange for shares in a different company. It does need careful analysis to ensure it meets relevant legislation though ...

The legislation I am talking about is TCGA 1992 and it means the person's old shares are effectively swapped for the new shares that were issued to them. If there is no disposal by the person then Capital Gains Tax is not payable.

The new shares simply replace the old ones. They will have the same base cost and acquisition date as the person's original shares and no gain or loss has been made.

Typical scenarios where this can occur include:

- creation of a holding company
- regrouping/restructuring
- a company takeover

Any share for share exchanges must be made for 'bona fide' commercial reasons.

You can apply to HMRC for clearance that the share for share exchange meets the rules, but you need to do this in the right way to ensure you don't get rejected. There are a number of reasons they could say no.

Legislation on share for share transactions seems pretty straightforward, however, it is in fact, quite complicated and specialist tax advice should always be taken before making any decisions.


If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.