RE: Nicaragua / Mina La India visit18 Mar 2026 13:40
HM Revenue & Customs (HMRC) generally treats Contingent Value Rights (CVRs) based on their nature and how/when you receive value from them. In UK tax terms, they’re usually handled within capital gains tax (CGT) rules rather than income tax—but the details matter.
Here’s how they’re typically treated:
1. At the time you receive CVRs :- If you get CVRs as part of a takeover or disposal of shares:
HMRC usually treats this as a reorganisation of share capital (no immediate tax charge).
Your original base cost (what you paid for the shares) is split between:
The cash you received, and
The CVRs (treated as a separate asset)
So, no CGT immediately on the CVR itself—just a deferral.
2. When CVRs pay out :- If the CVR later pays cash:
That payment is treated as a capital disposal of the CVR (or part of it).
You calculate a capital gain or loss:
Proceeds = cash received
Cost = portion of base cost allocated to the CVR
This is subject to CGT, not income tax.
3. If the CVR expires worthless :- If the conditions aren’t met and you get nothing:
You can usually claim a capital loss for the cost allocated to the CVR.
That loss can be used against other capital gains.
4. Exceptions / edge cases :- HMRC might treat CVRs differently if:
They resemble interest or income-like payments (rare)
They are traded separately and behave more like securities
The structure is unusually complex (e.g. earn-outs in private company sales)
Simple way to think about it
Receiving CVRs → no immediate tax
Cash from CVRs → CGT event
No payout → capital loss