A non-small company is subject to corporation tax on a distribution received unless, among certain other requirements, the distribution falls within an exempt class.

There are five exempt classes of distribution:

1. •

   distributions derived from transactions not designed to reduce tax, which is explained further in this Practice Note

2. •

   distributions from controlled companies

3. •

   distributions in respect of non-redeemable ordinary shares

4. •

   distributions in respect of portfolio holdings, and

5. •

   dividends in respect of shares accounted for as liabilities

For further information on the tax charge on distributions see Practice Note: How are non-small companies taxed on distributions received? For information on the exemptions applicable to small companies, see Practice Note: How are small companies taxed on distributions received? and for information on what a small company is, see Practice Note: What is a small company for the purposes of the distribution exemption?