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HMRC internal manual

Corporate Finance Manual

Deemed loan relationships: shares with guaranteed returns: non-qualifying shares: the redemption return condition: meaning of qualifying publicly issued shares

Qualifying publicly issued shares (QPIS)

This guidance applies to companies that hold shares up to 21 April 2009

The purpose of this exemption from S529 is to let out shares which are issued to members of the public and are widely held. This would typically be share issues issued by companies through public offers to raise finance.

CTA09/S530 provides that a share is a qualifying publicly issued share (QPIS) if:

  • it was issued by a company as part of an issue of shares to independent persons, and
  • less than 10% of the shares in that issue are held by the investing company or persons connected with it.

For these purposes, an independent person means a person not connected with a company within the meaning of ICTA88/S839. Where shares are issued via a broker or underwriter who then transfers the shares to independent persons, and the broker or underwriter is connected with the issuing company, HMRC will accept that the shares meet the QPIS test.

Note that the requirement for a ‘public issue’ is simply that the shares are issued to unconnected parties, there is no requirement that the shares have been the subject of a ‘public offer’. And the let out works by reference to the holding of the investing company only, and not the holding of all the shares in a particular issue.


An issuing company makes an issue of shares to three unconnected companies, A, B & C. Company A could hold 9% of an issue, company B 41% and company C 50%. The shares held by company A are QPIS, even though the shares held by companies B & C are not.

If the conditions in S530 are met, then subject to one exception, the shares are not within S529 whatever the purpose in acquiring them was.

The exception is provided by S530(3) if the company’s purpose in acquiring the shares was an unallowable purpose by virtue of CTA09/S531(1)(a) - see CFM45240. This applies where a company acquires a share to circumvent ICTA88/S95, and will normally only be relevant for financial trading entities such as banking groups. This prevents banks etc trading in what would otherwise be QPIS shares and avoiding being taxed as trading income on any dividends received (dividends on all their other trading shares would be taxable).