Income Tax (Trading and Other Income) Act 2005 section 401

Relief: distribution repaying shares or security issued in earlier distribution

Section 401 provides relief from double taxation where a company first issues bonus redeemable shares or securities (a "CD distribution") and later repays them (a "non-CD distribution"), so that the individual is not taxed twice on what is essentially the same economic event.

• Where income tax has been paid on a CD distribution (bonus redeemable shares or securities), the tax on a later non-CD distribution that repays those shares or securities is reduced
• The reduction is the lower of the tax on the original CD distribution and the tax on the subsequent non-CD distribution
• For calculation purposes, the CD distribution is treated as the lowest slice of the individual's dividend income, with the non-CD distribution treated as the next lowest slice (or the lowest slice if in a later year)
• The relief operates as a reduction at Step 6 of the income tax calculation set out in section 23 of ITA 2007