Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Distribution definition

What does Distribution mean? In tax practice, a distribution is a transfer of value by a company to its shareholders in respect of their shares, most commonly a dividend but also non-cash (in specie) and other shareholder returns. For UK corporation tax, “distribution” is a defined term in cta 2010, s 1000. That provision sets out categories treated as distributions and important exclusions. Broadly, it covers cash dividends; other transfers out of a company’s assets in respect of shares; certain redemptions or repayments; and amounts treated as distributions where returns on securities depend on the company’s results or are excessive. Exclusions include genuine...

UK corporation tax: distribution exemption for non-redeemable ordinary shares—definitions, share status (including non-UK entities), practical application and anti-avoidance

Published by a LexisNexis Tax expert

Practice notes

A non-small company will generally be liable to corporation tax on a distribution it receives unless, subject to certain other requirements, the distribution falls within an exempt category.

There are five exempt categories of distribution:

distributions on non-redeemable ordinary shares, explained further in this Practice Note
distributions from controlled companies
distributions in respect of portfolio holdings
distributions arising from transactions not designed to reduce tax
dividends on shares accounted for as liabilities

For more on the tax charge on distributions, see Practice Note: How are non-small companies taxed on distributions received. For the exemptions for small companies, see Practice Note: How are small companies taxed on distributions received? For what counts as a small company, see Practice Note: What is a small company for the purposes of the distribution exemption?

The exemption

A distribution is an exempt class if it is paid in respect of a share that is:

an ordinary share, and
not redeemable

What is an ordinary share?

...

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Michael McGowan

Michael trained as a solicitor at Clifford Chance where he qualified as a tax lawyer in 1989. From then until the end of 2015, he worked as a corporate tax lawyer in a number of leading UK and US law firms (both in London and New York), spending 18 years as a tax partner at Allen & Overy, Shearman & Sterling LLP and latterly Sullivan & Cromwell LLP. He has worked on a very wide range of corporate, financing, fund formation and real estate transactions as well as representing clients in major tax disputes. He has acted as an expert witness in tax litigation and has written and lectured extensively. He teaches business tax law part-time at King's College, London....

Web page updated on 22/05/2026

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