VCM45200 - VC loss relief: general: shares acquired by subscription

ICTA88/S574 (1) and (3) & ICTA88/S575 (2)

ICTA88/S574 (1) provides that ‘an individual who has subscribed for shares’ may claim VC loss relief. Shares are subscribed for when they are issued by the company, either on incorporation or at a later date, in consideration of money or money’s worth, ICTA88/S574 (3)(a). Shares which were purchased, or acquired by gift, will not have been subscribed for and will not usually be eligible for relief. However, there is one exception to this rule. ICTA88/S574 (3)(b) extends the scope of the relief so that an individual is treated as having subscribed for shares if their spouse or civil partner did so and subsequently transferred the shares to them. The spouses or civil partners must be living together - TCGA92/S288 (3) - in order for this rule to apply.

Shares may be issued on a share reorganisation, for example by a bonus or rights issue. Alternatively, shares may be issued on a share exchange or as part of a company reconstruction or amalgamation. ICTA88/S575 (2) provides that when shares are so issued relief will only be available where the original shares were subscribed for, unless the shareholder gives new consideration for the new shares. See VCM48000 onwards for detailed guidance on the rules in ICTA88/S575 (2) and examples show how they work in practice.