Dividends and distributions

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief.

For information on these changes, see: Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26.

What is a distribution?

A distribution for corporation tax purposes means any of the following:

A
any dividend paid by the company, including a capital dividend
B
any other distribution out of assets of the company (whether or not in cash) in respect of shares in the company except however much (if any) of the distribution:
1. ◦
  represents repayment of capital on the shares,

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

TAKE A FREE TRIAL

Latest Tax News

FTT allows SDLT repayment claim under paragraph 34 of Schedule 10 to the Finance Act 2003 (FA 2003) beyond time limit for claims made under FA 2003, s 44(9) (Candy v HMRC)

Tax analysis: In Candy, the First-tier Tax Tribunal (FTT) decided that paragraph 34 of Sch 10 to the Finance Act 2003 (FA 2003) provides a remedy when no other relief is available and therefore permitted the taxpayer (C) to claim relief for SDLT paid on a contract that was substantially performed but not completed despite relief under another provision, FA 2003, s 44(9), being out of time since that provision required the relief to be claimed by amending the return.

Scheme did not have duty of care regarding member’s individual tax advice (Dr D, CAS-70911-G6X6)

Pensions analysis: In the determination of Dr D, CAS-70911-G6X6, the Pensions Ombudsman partially upheld a complaint by a member who incurred a large tax charge after withdrawing his entire pension benefits at age 75. As the member approached age 75, he failed to act on the scheme’s recommended options or to take tax advice and his funds were automatically switched to a cash fund at age 75. He then withdrew his entire benefits, resulting in the tax charge. The Ombudsman found that the scheme was not responsible for the tax consequences of the member's actions and so was not under a duty of care to advise the member on the tax consequences of withdrawing his entire pension at that stage. Martin Scott of gunnercooke LLP looks at the decision.

Absence of valid reasons for delay in submitting complaint provides no grounds for extending three-year limitation period (Dr N, CAS-93557-F1X2)

Pensions analysis: In the determination of Dr N, CAS-93557-F1X2, the Pensions Ombudsman has rejected a complaint about an additional tax charge caused by the payment of a pension arrears lump sum. Dr N's 2014 incapacity pension application had been initially rejected, but after a successful 2021 appeal, his pension was backdated, resulting in additional tax charges. The Pensions Ombudsman found Dr N was not too incapacitated to appeal the 2014 decision and saw no grounds to extend the three-year limitation period. Martin Scott of gunnercooke LLP looks at the decision.

Tax weekly highlights—17 April 2025

This week's edition of Tax weekly highlights includes: (1) the Court of Appeal decision on VAT in WTGIL, (2) News Analysis on the UT’s decision in Mantides on IR35, (3) updated HMRC guidance on Multinational Top-up Tax and the Domestic Top-up Tax and (4) the judiciary publishing updated guidance on the use of AI.