The following Tax practice note Produced in partnership with Robert Langston of Saffery Champness provides comprehensive and up to date legal information covering:
The concept of ordinary share capital is important for UK tax purposes. This Practice Note sets out the key tax reliefs that require ordinary share capital (whether issued by a UK company or not), namely:
no gain/no loss treatment on intragroup transfers
corporation tax group relief
substantial shareholdings exemption
share for share exchanges
business asset disposal relief (formerly entrepreneurs’ relief)
relief for employee share acquisitions, and
enterprise investment scheme (EIS) and seed enterprise investment scheme (SEIS) relief
This Practice Note then considers the definition of ordinary share capital for UK tax purposes.
Assets may be transferred between companies, which are subject to UK corporation tax and within a 75% group, without crystallising tax on any gains arising. For more details, see Practice Note: Intra-group asset transfers.
For these purposes, a group consists of a principal company and all of its 75% subsidiaries. A company will only be a 75% subsidiary if, inter alia, it has issued ordinary share capital. Gains (and losses) may therefore arise on the transfer of an asset to a company that has not issued ordinary share capital (eg a company limited by guarantee, which has not been able to issue share capital since 1980), or which is a member of a group only by linking through a company, which has not issued ordinary share capital, to an
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