Share buybacks

Share buybacks

A company wishing to return value to its shareholders has a number of choices open to it. These choices include the option to buy back its own shares from its shareholders. This is known as a 'share buyback' or a 'company purchase of own shares'.

A share buyback, or purchase of own shares, involves a company buying its own shares from its shareholders and immediately cancelling those shares or taking them into treasury. A consequence of a share buyback, therefore, is that there is a fall in the number of company shares in issue.

For more on why a company might chose to do a share buyback, and the company law framework within which is permitted to do so, see Practice Notes: Tax consequences of share buybacks—main rules and Share buybacks—the legal framework.

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

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

Tax weekly highlights—1 May 2025

This week's edition of Tax weekly highlights includes: (1) coverage of the numerous ‘Tax update spring 2025’ announcements and publications, (2) an update from the CIOT on the LLP salaried member rules and (3) News Analyses on the Upper Tribunal’s (UT) decision on an SDLT overpayment relief claim (L-L-O Contracting Ltd) and on the First-tier Tax Tribunal’s (FTT) decisions on (i) the remedy available under FA 2003, Sch 10, para 34 when no other SDLT relief is available (Candy), (ii) the effect of liquidation on a director loan (Quillan) and (iii) a legislative drafting error in respect of the temporary reduced rate of VAT (JD Wetherspoon).

Tax update spring 2025—Tax analysis

Tax analysis: On 28 April 2025, the government announced a package of technical tax policy proposals aimed at simplifying and reforming the tax system and improving tax administration. These announcements included the publication of draft legislation, new consultations, various technical papers and responses to consultations, as well as updates on previously announced measures together with new initiatives.

Upper Tribunal denies SDLT overpayment relief in failed late MDR claim (L-L-O Contracting Ltd and others v HMRC)

Tax analysis: In L-L-O Contracting Ltd and others v HMRC, the Upper Tribunal (UT) dismissed the companies’ appeals against the First-tier Tax Tribunal’s (FTT) decision to dismiss appeals against HMRC’s decision not to allow claims to SDLT overpayment relief. The companies had not claimed multiple dwellings relief (MDR) in their SDLT returns and, having missed the time limit for making the claims, sought to obtain the relief by way of overpayment relief claims under paragraph 34 of Schedule 10 of the Finance Act 2003 (FA 2003).

FTT concludes cider supplies did not benefit from temporary reduced VAT rate (JD Wetherspoon PLC v HMRC)

Tax analysis: In JD Wetherspoon PLC v HMRC, the FTT decided that for the purposes of the temporary reduced VAT rate for hospitality and tourism, cider should be classified as an ‘alcoholic beverage’ and thus excluded from the reduced rate. The issue arose because a drafting error in the relevant legislation meant that cider was not included in the definition of an alcoholic beverage, however, the FTT applied the Inco principle to correct obvious drafting errors, and the taxpayer claim was therefore dismissed.