FORTHCOMING CHANGE relating to reporting requirements for close companies : On 19 March 2026, the government opened a consultation on proposals to require close companies to report more detail to HMRC on transactions with participators (usually shareholders), including cash withdrawals, loans, debts, dividends, other distributions, and asset transfers, except items already reported through RTI such as salary. Reported data would include the recipient, amount, date, and identifying details, potentially including NI numbers. The consultation sought views on scope, timing and delivery method (for example via CT600A, the tax return, or a digital service), whether to include repayments, releases and write-offs of loans, and whether existing penalties are sufficient or bespoke penalties are needed. The consultation closed on 10 June 2026. FORTHCOMING CHANGE relating to distributions framework: At Tax Update 2026, HMRC published a consultation on ‘Modernising the distributions framework’. The consultation includes a range of proposals aimed at reducing opportunities for income tax payers to extract value from companies in the form of capital rather than income. Many of the proposals, if enacted, will

From a shareholder’s perspective, when a company buys back its own shares, either directly or through an intermediary acting as agent for the company (whether on- or off-market), the purchase normally involves two elements for tax purposes: • an income distribution by the company to the shareholder to the extent the buyback proceeds exceed the amount the shareholder originally subscribed for the shares, and • a disposal of shares by the shareholder for chargeable gains purposes, with the disposal proceeds being the amount of cash received less any amount chargeable to income or corporation tax In order to be able to calculate precisely how a shareholder will be taxed on a share buyback, it is therefore necessary to determine how much of the amount paid is treated as an income distribution. Note that this calculation is complicated where there have been prior bonus issues of shares by the company (for more on this, see below). This Practice Note focuses specifically on calculating the income and capital elements of the proceeds received

Tax consequences of different buyback structures The table below provides a high-level summary of the tax consequences that flow from the different types of share buyback structures that a UK company can use. In all cases, it assumes that a relevant shareholder is UK resident and holds the shares that are bought back as an investment. For a more detailed analysis of the tax treatment of share buybacks, see Practice Notes: • Tax consequences of share buybacks—main rules • Tax consequences of share buybacks—calculating the income capital split • Tax consequences of share buybacks—unquoted trading companies For a table summarising other methods by which a company can return value to shareholders and the key UK tax considerations relevant to each structure, see: Key UK tax considerations for returning value to shareholders—comparative table. Note that special rules apply where the company repurchasing its shares is a qualifying asset holding company. For more on this, see Practice Note: Qualifying asset holding companies (QAHCs)—tax treatment. UK resident individual shareholder UK resident corporate shareholder Company buying back shares On-

Provided that certain conditions set out in the Companies Act 2006 (CA 2006) are met, a limited company is permitted to buy back shares that it has in issue. This is known as a share buyback or a ‘purchase of own shares’. In addition to the CA 2006 conditions, there are other rules and guidelines that apply to listed and AIM companies. In particular, a listed company must have regard to the UK Listing Rules (UKLR) and the Disclosure Guidance and Transparency Rules (DTR), and an AIM company, the AIM Rules. Any such companies may also need to take institutional investor guidelines into account. Note that the restrictions on buybacks that are contained in CA 2006 do not apply to unlimited companies. Unlimited companies are not discussed further in this subtopic. What are share buybacks? Why do a share buyback? Companies carry out share buybacks for a variety of reasons. One reason might be to return surplus cash to shareholders that does not have a specific purpose and cannot be invested to produce a return greater than

Where a share buyback is implemented by a company directly, or through an intermediary acting as agent for the company, the standard tax treatment for a UK resident shareholder is that they will be treated on the repurchase as both: • disposing of their shares for chargeable gains purposes, and • receiving an income distribution Beyond this, the tax treatment varies slightly depending on whether the shareholder is an individual or a corporate shareholder. For more on this, see Practice Notes: Tax consequences of share buybacks—main rules and Tax consequences of share buybacks—calculating the income capital split. However, special rules can apply to buybacks carried out by certain unquoted companies. These can prevent any part of the repurchase proceeds being treated as a distribution in the hands of a particular UK resident shareholder. As a result, the entirety of the amount received by the shareholder is treated as proceeds of a disposal for CGT/corporation tax on chargeable gains purposes. The relative benefits of this—ie wholly capital treatment—depend on the circumstances of the taxpayer. Note

A UK tax resident bank will need to consider the following tax issues when lending to an overseas borrower: • local withholding tax, including: ◦ the lender’s ability to claim double tax treaty (DTT) relief, and ◦ the relevant process to benefit from DTT relief • UK tax treatment of the loan • stamp, transfer, registration and other similar taxes • value added tax (VAT) • the Foreign Account Tax Compliance Act (FATCA) in the US and similar measures worldwide • bank levies, and • financial transaction taxes Local withholding tax and a lender’s ability to claim double tax treaty relief Local withholding tax One of the key tax considerations for a UK lender wishing to lend to an overseas borrower is whether there is any foreign withholding tax that would reduce the amount of interest the lender actually receives and, if there is, whether this can be eliminated by relying on any local exemptions or DTT relief. Unless

This Practice Note provides an overview of some of the tax issues that are particularly relevant to a company operating in the life sciences sector. Such companies may include pharmaceutical, medical technology, biotechnology companies etc. In particular, it considers, among other things, corporation tax issues such as research and development (R&D) reliefs and the patent box; and cross-border issues such as transfer pricing and investment reliefs. Cross-border framework On 31 January 2020, the UK ceased to be an EU Member State and entered an implementation period during which it continued to be treated by the EU as a Member State for many purposes. The implementation period ended on 31 December 2020, after which EU law and the jurisdiction of the Court of Justice of the European Union largely ceased to apply to the UK (with the exception of VAT and excise duty, where EU law and principles continue to be relevant). The trading relationship between

This Practice Note: • explains: ◦ the purpose of the tax credit clause that is normally found in a loan agreement, and ◦ that the standard drafting of the tax credit clause is lender-friendly and how this limits the benefit for a borrower, and • provides drafting suggestions to help a borrower obtain the benefit of a tax refund or rebate from a treaty lender In the context of syndicated loans made to corporate borrowers, it is standard to use one of the model loan facility agreements of the Loan Market Association (LMA), all of which: • contain a standard tax credit clause • are drafted in a lender-friendly way, and • assume that the relevant tax is UK withholding tax—it is important to ascertain which jurisdiction's withholding tax is relevant and, if this is not UK withholding tax, amend the agreement appropriately The LMA's model loan agreements are available to its members on the LMA website (www.lma.eu.com). In addition, the Association of Corporate Treasurers (ACT)

FORTHCOMING CHANGE: The government is exploring options to potentially simplify the process and administration of double tax treaty (DTT) relief from UK withholding tax on payments of UK source yearly interest to non-UK lenders. For more information on the consultation published on 13 July 2026, see News Analysis: Legislation Day: Draft Finance Bill 2027—Tax analysis—Finance. It is standard market practice for loan agreements (also known as facility agreements), whether bilateral or syndicated, to: • prohibit a borrower from deducting (or withholding) an amount from any payment unless that deduction is required to be withheld by law, and • where tax is obliged by law to be withheld from a payment (such as withholding tax on interest), require (subject to limited exceptions) a borrower to pay an additional amount that, after deduction of the tax, will leave the lender with the same amount as it would have been entitled to receive had no tax been required to be withheld from the payment—this is known as the tax gross

This Practice Note: • explains: ◦ the purpose of the tax indemnity clause that is normally found in a loan agreement, and ◦ that the standard drafting of the clause is lender-friendly and how this limits the benefit for a borrower, and • provides drafting suggestions to help a borrower limit its exposure under the tax indemnity clause In the context of syndicated loans made to corporate borrowers, it is standard procedure to use one of the model loan facility agreements of the Loan Market Association (LMA), all of which: • contain a standard tax indemnity clause • are drafted in a lender-friendly way, and • assume that the relevant tax is UK withholding tax—it is important to ascertain which jurisdiction's withholding tax is relevant and, if this is not UK withholding tax, amend the agreement appropriately Model loan agreements produced by the LMA are available to its members on the LMA website (www.lma.eu.com). In addition, the Association of Corporate Treasurers (ACT) also produces a helpful

This Practice Note: • outlines the main conditions that must be satisfied in order for a non-UK lender to be eligible for exemption from UK withholding tax on interest payments under a relevant double tax treaty with the UK, detailing in particular the potential problem raised by the beneficial ownership requirement, and • provides drafting suggestions to strengthen a borrower's position As noted in: • Practice Note: Tax considerations on a loan agreement—the tax gross up clause, and • Checklist: Reviewing a loan with a view to alleviating UK withholding tax risk—checklist withholding tax is a key concern relating to a loan. The risk that UK withholding tax might be due on an interest payment and therefore that a borrower might have to gross up a payment for that withholding tax is increased where the lender is not UK tax resident. Some non-UK tax resident lenders are resident in a jurisdiction that has a double tax treaty with the UK under which certain lenders are entitled to full exemption from UK withholding

HM Revenue & Customs (HMRC) has announced that a tax consultant, David Michael Hughes, has been ordered to repay £1.7m or undertake an additional four years in jail, after stealing £6.9m from constructions workers. Money paid by clients and taken from workers’ wages should have been paid to HMRC but was split between Hughes and his co-conspirators. Hughes was also jailed for nine and a half years in August 2018 for leading a financial conspiracy using a variety of bank accounts to steal millions from clients.