IFM16310 | Exchanges, Mergers, Schemes of Reconstruction: other investment funds: introduction

A reorganisation or reconstruction which results in shares being exchanged for other shares is typically treated for chargeable gains purposes as not involving a disposal or acquisition of new shares. Instead the acquisition of the new shares is treated as taking place at the same time as the existing shares. These rules are contained in sections 126 to 138A of the Taxation of Chargeable Gains Act 1992 (TCGA) – see the Capital Gains Manual from CG51700C.

These rules apply generally to companies that are not investment funds. They also apply where an exchange, merger or reconstruction involves an investment fund that is not a collective investment scheme (CIS) - see IFM16120. In particular these rules apply where the exchange, merger or reconstruction involves:

• An investment company (see IFM14000); or

• An offshore fund that is not a collective investment scheme.

References to investment fund are references to such funds as are not a CIS.