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HMRC internal manual

Capital Gains Manual

Co.purchases own shares: capital treatment

A company’s purchase of own shares would not be treated as a distribution under CTA10/S1033 if the following requirements are met:

  • the company is an unquoted trading company, or the unquoted holding company of a trading group,

and either,

  • Condition A – see CG58630, or
  • Condition B – see CG58645

is met.

Once CTA10/S1033 is met, the transaction falls outside the scope of distributions and the shareholder is treated as receiving a capital payment. If the trade of the shareholder was buying and selling of shares, then the payment received would be treated as an income receipt and subject to trading rules.