Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Share Capital definition

What does Share Capital mean? In practice, share capital is the equity a company raises by issuing shares to its members. It records the nominal (par) value of shares allotted since incorporation and underpins shareholder rights, pre-emption on new issues, distributions and capital maintenance. Across England & Wales, Scotland and Northern Ireland (Companies Act 2006) and Ireland (Companies Act 2014), “share capital” is a widely used statutory and accounting term rather than a single defined expression. Key features include: - Issued (allotted) share capital is stated at nominal value and is distinct from any share premium. - On the balance sheet it appears as called-up...

Ordinary share capital and UK tax: definition, HMRC guidance, foreign entities, and effects on group relief, SSE, reorganisations, BADR/investors’ relief, employee shares, EIS/SEIS

Published by a LexisNexis Tax expert

Practice notes

The idea of ordinary share capital carries weight for UK tax purposes. This Practice Note outlines the principal tax reliefs that commonly hinge on ‘ordinary share capital’ (regardless of whether the issuer is a UK company), namely:

no gain/no loss treatment on intragroup transfers
corporation tax group relief
substantial shareholdings exemption
share for share exchanges and schemes of reconstruction
business asset disposal relief (formerly entrepreneurs’ relief) and investors’ relief
relief for employee share acquisitions, and
enterprise investment scheme (EIS) and seed enterprise investment scheme (SEIS) relief

This Practice Note then considers how ‘ordinary share capital’ is defined for UK tax purposes.

No gain/no loss treatment on intragroup transfers

Where companies are within the charge to UK corporation tax and form a 75% group, assets can pass between them without triggering tax on any profits or gains. For more detail, see Practice Note: Intra-group asset transfers.

For this rule, a group comprises a principal company together with all of its 75% subsidiaries. A company qualifies as a 75% subsidiary only if, among other conditions, it has ordinary share capital in issue...

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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 21/05/2026

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