Consultation highlights concerns over changes to taxation of dividend income and share disposals.

HMRC’s ‘company distributions’ consultation highlighted the concern that the changes to taxation of dividend income and share disposals would drive some to look to dividends and capital distributions, rather than salary or income.

The government has stated that it ‘will continue with plans to amend the Transactions in Securities rules and introduce a new TAAR [Targeted Anti-Avoidance Rule]’ and says that the legislation will be amended so that:

  • it will not apply to minority shareholders
  • ‘arrangements’ is clearly defined
  • distributions will not be treated as income to the extent that they represent the capital gains ‘base cost’
  • the exemption for distributions of irredeemable shares will be widened to ensure that the TAAR does not apply to standard ‘liquidation demergers’.

The revised legislation is part of the Finance Bill 2016 and remains due to come into effect from 6 April 2016.

You can expect more on this area in the coming months.

Article from ACCA In Practice