Share buybacks

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FORTHCOMING CHANGE relating to the taxation of distributions and repayments of capital: At Budget 2026 (28 October 2026), the government confirmed that it would be proceeding with the seven areas of reform proposed in its consultation on modernising the tax framework dealing with distributions made by companies to shareholders who are individuals or trusts, launched at Tax Update 2026 (23 June 2026). A technical consultation on draft legislation will be opened in 2027, with the new rules expected to come into effect prospectively from April 2028. The stated aim of the proposals is to improve clarity and consistency by reducing unintended differences in tax treatment and the scope for error and non-compliance. The proposals include the following:

  1. •

    one of the seven proposals put forward in the June consultation was to reform the treatment of new consideration and repayments of capital following a share reorganisation, which included changing existing rules so that share buybacks and other returns of capital reflect a ‘frozen’ amount of capital on the shares in any future holding companies at the amount subscribed for in the original investment—the consultation outcome published alongside...

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