Jurisdiction(s):
United Kingdom

Key definition

Statutory demerger definition

What does Statutory demerger mean? In practice, a statutory demerger (also called a dividend demerger) separates a business by the target company distributing, by way of a dividend in specie, the shares of a subsidiary to its own shareholders so the split is tax‑neutral when statutory conditions are met. The expression is practitioner shorthand for demergers that satisfy the legislated exempt distribution regime in UK tax law (for example, under the Corporation Tax Act 2010) and the broadly equivalent Irish rules in the Taxes Consolidation Act 1997; it is not a Companies Act label. Key legal features typically include: a pro rata dividend in specie of...

UK statutory demergers: chargeable payments (general and unquoted company rules), tax consequences, HMRC clearances and appeals, and exempt distribution and chargeable payment return requirements

Published by a LexisNexis Tax expert

Practice notes

Practice Note overview

This Practice Note addresses key aspects of the tax regime for statutory (ie, Dividend) Demergers, specifically:

the anti-avoidance provisions on chargeable payments
the clearance and notification procedures

For background on why a company might undertake a demerger, and an outline of alternative demerger structures, see Practice Note: Demergers—an introduction to the tax issues.

For details on:

what a Statutory demerger involves
how the direct and indirect routes differ
when a company may choose a statutory demerger
the procedural steps
the tax consequences
and the importance of qualifying as an exempt distribution

see Practice Note: Statutory demergers. For a precedent clearance application for a statutory demerger, refer to: Precedent: Clearance letter—statutory demerger.

Chargeable payments

A distribution made pursuant to a statutory demerger should be treated as exempt (ie, an exempt distribution) and, accordingly, should not give rise to a charge to income tax or corporation tax on income in the shareholders’ hands...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Web page updated on 22/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...