Corporation Tax Act 2010 section 1115

"New consideration"

Section 1115 defines "new consideration" for the purposes of the distribution rules, establishing what counts as genuine external value brought into a company rather than recycled company assets.

• New consideration means consideration not provided directly or indirectly out of the company's own assets, and specifically excludes amounts retained by the company through capitalising a distribution.
• Where shares are issued at a premium representing new consideration, any part of that premium later used to pay up share capital is also treated as new consideration, unless that premium has already been used to recharacterise a distribution as a repayment of share capital under section 1025.
• Consideration derived from the value of a company's share capital, securities, or voting and other rights is generally not treated as new consideration, but exceptions apply for money or value received as a non-CD distribution, repayments of share capital or security principal, and the surrender of rights on cancellation or acquisition by the company.
• Even where those exceptions apply, the amount treated as new consideration is capped at the new consideration originally received by the company for the shares or securities, or, where the share capital was itself a non-CD distribution on issue, the nominal value of that share capital.