Distribution key concepts—repayment of capital


Published by a ³ÉÈËÓ°Òô Tax expert
Practice notes

Distribution key concepts—repayment of capital


Published by a ³ÉÈËÓ°Òô Tax expert

Practice notes
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Alongside the concept of new consideration, which is further explained in Distribution key concepts—new consideration, the concept of repayment of capital is vital in determining whether certain transactions are distributions.

At the broadest level the intention of the use of repayment of capital is to ensure that the definition of distribution captures only a real distribution of Profits, in whatever form, by ensuring that payments which represent the return of capital contributed to the shareholders of a company are not treated as distributions. For more on distributions generally, see: Scope of distributions for tax purposes.

Where is repayment of capital used?

The concept of repayment of capital is used in:

  1. •

    Paragraph B—a distribution out of assets of the company in respect of Shares in the company is not treated as a distribution to the extent that it is a repayment of capital

  2. •

    Paragraph G—with effect from 17 July 2012, a transfer of assets that would have been a paragraph B distribution but for being a repayment of capital is also excluded from being a distribution under

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Jurisdiction(s):
United Kingdom
Key definition:
Distribution definition
What does Distribution mean?

In the Corporation Tax Acts (ctas) "distribution" means anything falling within of CTA 2010, s 1000.

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