There are specific rules within the legislation to deal the effects of corporate reorganisations.
Section 126 reorganisations
Where, before the disposal on which investors' relief is being claimed, there has been a reorganisation within the meaning of TCGA 1992, s 126 (see D6.102) and no consideration is given by the qualifying person claiming the relief, on the subsequent disposal the following rules apply1.
Where a number of the original shares were subscribed for by the qualifying person and held continuously for a period ending immediately before the reorganisation, an appropriate number of shares in the new holding are treated as having been subscribed for and as having been issued on, and held continuously from, the same date as those original shares. The number of shares so treated is found by multiplying the total number of shares in the new holding immediately after the reorganisation by the number of original shares subscribed for, issued and held, divided by the total number of original shares. Thus the new holding of shares after the reorganisation is treated as having the same proportion of qualifying, potentially qualifying and excluded shares as the original holding. If part of the holding of original shares does not meet these conditions the number of shares in the new holding to be treated as the same asset as the original shares is restricted.
Jon holds 500 shares in Zed Ltd. He subscribed for 400 of these shares on 17 May 2016 and held them