Q&As

What are the income and capital gains tax consequences for a shareholder in a UK listed company, when those shares are bought back by the company for the same price as they were subscribed for as part of a share buyback? Is the tax treatment different for a non-UK/EU resident shareholder?

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Published on LexisPSL on 10/11/2020

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • What are the income and capital gains tax consequences for a shareholder in a UK listed company, when those shares are bought back by the company for the same price as they were subscribed for as part of a share buyback? Is the tax treatment different for a non-UK/EU resident shareholder?

A share buyback is typically structured in one of three ways:

  1. an intermediary (usually the company’s broker) acting as principal purchases the shares from shareholders and the company then purchases those shares from the intermediary in a separate transaction

  2. the company itself directly purchases the shares from its shareholders, or

  3. the company itself, through an intermediary (usually the company’s broker) acting as agent, purchases the shares from its shareholders

The tax treatment will be dictated by the structure of the share buyback.

Usually, a listed company that proposes to buy back its shares will do so ‘on-market’ (ie on a recognised investment exchange and subject to a marketing arrangement on that exchange—for more on th

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