Commentary

C2.826 Compensation stock

Capital gains tax
Capital gains tax | Commentary

C2.826 Compensation stock

Capital gains tax | Commentary

C2.826 Compensation stock

The exchange for gilt-edged securities of company shares compulsorily acquired under a nationalisation scheme is treated neither as a disposal of the shares nor as a conversion of securities1, but any gain or loss which has accrued up to the date of the exchange is effectively held in suspense and is brought into charge (or allowed) when the gilt-edged securities are disposed of2.

The above treatment of an exchange of shares applies where by any enactment shares in a company are compulsorily acquired in exchange for government stock, as would be the case under a nationalisation scheme3.

The exchange is not treated as a disposal and therefore no gain or loss arises at the time of exchange. However, any gain or loss that would have arisen had the exchange been a disposal is brought into account on any subsequent disposal of the gilt-edged securities.

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