UK and International Tax news
HMRC Issues Guidance On Purchase Of Own Shares
Friday 26th September 2014
HMRC has recently issued a new help sheet on unquoted trading companies purchasing their own shares and the conditions which must be met before a payment can be treated as an exempt distribution.
An exempt distribution is a payment that is not treated as a distribution but instead is treated as consideration for the disposal of shares and subject to capital gains tax.
As a general rule, where a company makes a purchase of its own shares, including by way of redemption or repayment of its own shares, any excess paid over the amount of capital originally subscribed for the shares is a distribution. However, special provisions in s.1033 CTA 2010 enable an unquoted trading company or an unquoted holding company of a trading group to undertake a purchase of its own shares without making a distribution for tax purposes.
There is a clearance procedure for those wishing to obtain advance confirmation from HMRC that the distribution arising will be an exempt distribution.Contact Us