The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
For unquoted trading companies only, the amount received by a shareholder on selling his shares back to the company may be treated as capital, rather than as a distribution, provided certain conditions are met. For an illustration of how this is computed see Example 1.
This treatment only applies to purchases of own shares by unquoted trading companies that are not 51% subsidiaries of a quoted company, or to purchases of own shares by unquoted holding companies of a trading group.
The repurchase must fulfil either Condition A or Condition B:
Condition A (all must be fulfilled)
See the Checklist - purchase of own shares (capital treatment - condition 'A').
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