The transactions in securities legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a share disposal to obtain a beneficial CGT rate, i.e. to avoid income tax. This document discusses these rules in detail, together with the required conditions; relevant consideration; excluded circumstances; and calculation of income tax advantage.
Points discussed within this guidance note:
> The scope of the rules
This note sets out the circumstances in which the rules apply including where the main purpose, or one of the main purposes of the transaction in securities is to obtain an income tax advantage. Prior to 6 April 2016, this condition referred to the person's main purpose rather than the transaction's main purpose. From 6 April 2016, the legislation can apply to any person and not only to a person who is a party to the transaction.
> Transaction in securities
This note sets out how to determine what a transaction in securities is, as the legislation defines 'transaction in securities' very broadly, as 'a transaction, of whatever description, re-lating to securities', which also includes shares. It also sets out Condition A and Condition B, one of which must apply for the rules to be utilised
> The two conditions
> Relevant consideration
> Excluded circumstances
> Calculation of income tax advantage
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