HMRC have issued a guidance note that highlights its view on the tax treatment of payments as a result of a capital reduction. The guidance is called Guidance on tax treatment of payments to individuals and other non-corporates following share capital reduction and starts by stating that the “guidance applies to payments from UK incorporated companies undertaking such reductions [payments received by individuals and other non-corporates from reserves created following a share capital or share premium reduction] in accordance with UK company law. It also applies to payments from other UK resident companies that are incorporated outside the UK which have undertaken capital reductions in accordance with the company law of the company’s territory of incorporation.”
To view the guidance, please click here.
To find guidance on company purchase of own shares, please click here.