Demutualisation of Scottish Provident

Arising from the demutualisation of Scottish Provident, members have the option of receiving either cash or loan notes. The mechanism to achieve this is that policy holders will first receive shares in Scottish Provident. The holders of these shares will then be offered either cash or loan notes, by a subsidiary of Abbey National, in exchange for the shares. The cash received is taxable to CGT as it is a disposal of shares. There is no base cost. The receipt of loan notes is relieved by Section 586 TCA 1997. CGT arising on the loan notes is therefore deferred until they are redeemed. Again there will be no base cost.