Reorganisation treatment for shareholders in a rights issue and its CGT implications

Published by a ��˾��ҹ�� Tax expert

Practice notes

Reorganisation treatment for shareholders in a rights issue and its CGT implications

Published by a ��˾��ҹ�� Tax expert

Practice notes

This Practice Note:

•
explains the key CGT (used as shorthand for capital gains tax and corporation tax on chargeable gains) implications of a rights issue for shareholders who:
1. ◦
  are resident for tax purposes in the UK, and
2. ◦
  hold their existing shares (also referred to as original shares) in the issuer as an investment and are therefore subject to taxation on chargeable gains in respect of any disposal of their shares (whether existing or new shares) in the issuer, but
•
does not cover the tax implications of a rights issue for shareholders who either:
1. ◦
  are resident for tax purposes outside the UK, or
2. ◦
  are subject to special tax rules because, for instance, they do not hold their existing shares as an investment (such as share dealers) or they have acquired (or are deemed to have acquired) their shares in connection with an employment or office

This Practice Note also does not deal with the tax implications of a rights issue where securities other

Jurisdiction(s):

United Kingdom

Key definition:

Shares definition

What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

��˾��ҹ��