Share Buybacks

This practice note gives an overview of direct taxes in the UK tax regime. It covers income tax, corporation tax and capital gains tax. It discusses the principles of calculation, rates, payment and compliance, and reliefs (such as capital allowances and research and development (R&D) relief).

This table contains details of reorganisations by listed companies principally aimed at increasing distributable reserves, announced in 2007. For details of more recent reorganisations and for fuller details of the issues covered in the table below, see PLC What's Market. Under section 830(1), Companies Act 2006 a company may only make a distribution out of profits available for the purpose as determined in accordance with section 830(2) (see further Practice note, Distributions). One method used to create distributable reserves is to insert a new holding company (Holdco) above the existing listed company using a scheme of arrangement under Part 26, Companies Act 2006. The shareholders of the listed company receive shares in Holdco and their existing shares are cancelled. The company then issues new shares to Holdco which becomes the holding company of the group and whose shares are admitted to listing. This is followed by a reduction in the nominal value of the Holdco shares creating a reserve that can be used for future dividends and share buybacks. Most of the structures outlined in this table involved shareholders receving new shares in Holdco in consideration for the cancellation of their shares in the existing company but in one case shareholders received cash and in another B shares. So this type of restructuring can be coupled with a return of cash.

This table contains details of special dividends announced by companies with shares admitted to the Official List of the London Stock Exchange and to AIM between 1 January 2007 and 24 November 2008. A special dividend is one method of returning surplus cash to shareholders. For details of more recent special dividends and for fuller details of the special dividends covered in the table below, see PLC What's Market.The table and the What's Market database include a link to the announcement of the dividend.

A practice note on the tax implications of a demerger carried out as a scheme of arrangement made under Part 26 of the Companies Act 2006 (formerly section 425 of Companies Act 1985). (This note was formerly called "Section 425 Companies Act 1985 schemes: tax". It has been renamed to reflect the entry into force on 6 April 2008 of Part 26 of the Companies Act 2006, which replaces section 425 of the Companies Act 1985.) 

This note considers the commercial reasons for a share buyback, the different types of buyback and the main tax issues that arise in respect of a buyback.

A note on the substantial shareholding exemption which exempts companies from corporation tax on a gain made on the disposal of a substantial shareholding in another company.

A document containing items formerly found in PLC Tax legislation trackers but that are now in force.

This note is a general summary of the UK rules applying to the taxation of chargeable gains. It describes what chargeable gains are, what assets are affected, when disposals arise, the way in which gains are calculated and the manner in which they are taxed, exceptions from taxation, anti-avoidance rules and how allowable losses may be used. This note is intended as a general overview, so you should be aware that the tax treatment in a particular case may differ from the general position described in this note.

A practice note listing the recent deals published on What's Market.