Capital Dividends - An Update

Following recent concerns that the corporate dividend exemption might not apply to certain dividends because HMRC regarded them as being capital in nature, a recent ministerial statement states that the Finance Bill will restore previous expectations as to the tax treatment of distributions for corporate receipients. Whilst the statement is silent on this, it is likely that this legislation will only apply to UK dividends.

HMRC are also consulting on changes to the value shifting rules that might now apply whenever dividends are paid to materially reduce the value of a company so as to avoid CGT.

See also:

First Nationwide - May 2011

First Nationwide and Dividends - Apr 2011

Capital Dividends - An Update - Feb 2010

Can a dividend be capital in nature? - Feb 2010

When is a dividend not a dividend? - Jan 2010

This article was originally published in Tax Journal.

Sara Luder (partner)