Taxes Consolidation Act 1997 Schedule 25A paragraph 1

Effect of earlier no-gain/no-loss transfer

Paragraph 1 of Schedule 25A provides rules for extending the period for which a company is treated as having held shares, where those shares were acquired through a no-gain/no-loss transfer, for the purposes of the participation exemption in section 626B.

• Shares are "derived" from other shares where a reorganisation or reduction of share capital causes the new shares to stand in place of the old ones under section 584, including through a sequence of such events.
• The holding period for shares is extended backwards to include any earlier period during which the shares, or shares from which they are derived, were held by a company that transferred them in a no-gain/no-loss transfer.
• A no-gain/no-loss transfer is a disposal and corresponding acquisition that, under the Capital Gains Tax Acts, is deemed to take place at a consideration producing neither a gain nor a loss for the person making the disposal.
• Where the holding period is extended, the company disposing of the shares is treated as having had the same entitlement to shares and share-related rights as the predecessor company that held the shares during the extended period.