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Benefits Of The Share For Share Exchange Rules

More complex than it seems ...

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Posted by Helen Beaumont on 13/04/2022 @ 8:00AM

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 ...

There are a number of reasons HMRC could say no to your share for share exchange!

There are a number of reasons HMRC could say no to your share for share exchange!

copyright: pix1861 / pixabay

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.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about share for share exchanges, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.