Taxes Consolidation Act 1997 Schedule 16 paragraph 4

Capital gains: shares, and rights to shares, in successor company

Paragraph 4 of Schedule 16 sets out the capital gains tax treatment of shares, and rights to shares, in a successor company issued to members of a building society on its conversion into a company.

• A member's right to acquire shares in the successor company (whether free, at a discount, or in priority to others) is treated as an option acquired for no consideration and having no value, so that the right itself triggers no capital gains tax charge.
• Where shares are issued to a member, their cost for capital gains tax is restricted to the amount of any new consideration actually paid — if no new consideration is given, the shares are treated as acquired for nothing and as having no value at the time of acquisition.
• Where shares are issued to trustees for transfer to members for no new consideration, the shares are treated as acquired by the trustees for nothing, the members' interests are treated as having no cost and no value, and when a member becomes absolutely entitled to shares the trustees are treated as disposing of and reacquiring them on a no-gain/no-loss basis.
• The converting society must make an electronic return to Revenue within 30 days of registration as a company, specifying each member's name, address, PPS Number, share entitlements, new consideration payable, asset entitlements, and any other information Revenue requires.