Part 23

Company distributions
Chapter 3

Matters which are not distributions

Stock dividends

Stock dividends
1049
1
This section applies to—
a
share capital issued by a UK resident company in lieu of a cash dividend, and
b
bonus share capital issued by a UK resident company in respect of shares in the company of a qualifying class.
2
For the purposes of subsection (1)(b) shares are of a qualifying class if—
a
shares of that class carry the right to receive bonus share capital in the company (of the same or a different class), and
b
that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.
3
If the share capital is issued in a case where section 410(2), (3) or (4) of ITTOIA 2005 (stock dividend income) applies—
a
the share capital does not, despite paragraph C in section 1000(1) (redeemable share capital), constitute a distribution within the meaning of section 1000(1), and
b
the share capital is not, for the purposes of—
i
section 1022 (bonus issues following repayment of share capital), or
ii
section 1026 (distributions following a bonus issue),
treated as issued “as paid up otherwise than by the receipt of new consideration”.
4
This section is subject to—
a
section 1050, and
b
paragraph 108 of Schedule 2 (special rules for share capital issued in respect of shares issued before 6 April 1975).
Pt. 23 applied (with modifications) by 2003 c. 1, s. 554AC(3) (as inserted (with effect in accordance with Sch. 1 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 1 para. 2)