Corporation Tax Act 2010 section 1034

Requirements as to residence

Section 1034 sets out the UK residence requirements that must be met by the seller (and any nominee) when a company purchases its own shares, in order for the purchase to qualify for capital treatment rather than being treated as a distribution.

• The seller of the shares must be resident in the United Kingdom in the tax year in which the company purchases the shares.
• Where shares are held through a nominee, that nominee must also be UK resident in the tax year of the purchase.
• Where the seller has died and shares are held by personal representatives, their residence is treated as the same as the deceased's residence immediately before death.
• These residence conditions are essential qualifying requirements for the share purchase to receive favourable capital gains treatment under the purchase of own shares rules.