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Introduction to distributions

Distributions received by UK companies are taxable unless they fall within a particular exempt category, regardless of whether they are paid by UK or overseas companies. There are different exemptions depending on whether the company is classed as small or not. The relevant rules are contained in CTA 2009, Part 9A. In practice, the majority of dividends will be exempt under the rules.

This guidance note outlines the regime and considers what is included within the meaning of distributions for this purpose.

Scope of the distributions regime

The definition of 'distributions' for the purpose of the corporation tax acts is broad. In overview, it includes the following:

1. •

   any dividend including capital dividends (this does not include distributions as part of a winding up)

2. •

   any other distribution out of the assets of the company in respect of shares in the company, whether in cash or otherwise (this does not include the repayment of capital for shares as a distribution)

3. •

   redeemable share capital or any new security, if not issued for full consideration

4. •

   interest,