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