Corporation Tax Act 2009 section 931F

Distributions in respect of non-redeemable ordinary shares

Section 931F provides that dividends and other distributions received on ordinary shares that are not redeemable fall into an exempt class for corporation tax purposes.

• A dividend or other distribution is exempt from corporation tax if it is paid on a share that qualifies as both ordinary and non-redeemable.
• An ordinary share is one that carries no preferential rights to either income or capital — in other words, a straightforward equity share.
• A non-redeemable share is one that the issuing company has no obligation or option to buy back from the holder.
• If both conditions are met, the distribution falls into an exempt class automatically, without further conditions needing to be satisfied.