Revenue Note for Guidance

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Revenue Note for Guidance

626C Treatment of assets related to shares

Summary

Section 626C provides a corresponding exemption to that provided for in section 626B for assets related to shares.

Details

Asset related to shares in a company

(1)(a) The circumstances in which an asset is to be regarded as being related to shares in a company are set out.

  • (i) an option to acquire or dispose of shares in a company is an asset related to shares in that company.
  • (ii) certain securities are related to shares in a company where the holding of the securities gives a right to acquire or dispose of shares in the company, an option to acquire or dispose of shares in the company or another security with similar rights.
  • an option to acquire or dispose of such a security or an interest in such a security is also an asset related to the underlying shares.

(1)(b) In determining whether a security is an asset related to shares, no account is to be taken of rights attaching to the security other than rights in relation to the shares, or of rights in respect of which there was a negligible likelihood that they would be exercised to any significant extent.

Exemption from Capital Gains Tax: Disposal of an asset related to shares

(2) A gain accruing to a company on the disposal of an asset related to shares in another company is not to be a chargeable gain in any of the following circumstances:

  • (a) where the company making the disposal holds shares in the other company immediately before the disposal of the asset and any gain on the disposal of those shares would, under section 626B, not be regarded as a chargeable gain.
  • (b) where the company making the disposal does not itself hold shares in the other company but a fellow-group company holds such shares immediately before the disposal of the asset and, if those shares had been held by the company making the disposal, any gain on this disposal would, under section 626B, not have been a chargeable gain.

For the purposes of determining whether a company is a fellow-group company, a group is to be taken to be a company and all of its 51 per cent subsidiaries.

Relevant Date: Finance Act 2019