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A purchase of own shares by a company is often done as a simpler alternative to more complex share reconstructions or organisations. »Ê¹ÚÌåÓýapp tax treatment would depend on how the purchase of own shares was carried out.

Any excess of the consideration over the shares� subscription price would be treated as a distribution under CTA10/S1000(1)B when a company is purchasing its own shares unless the applicable legislation from CTA10/S1033 to S1048 applies.

»Ê¹ÚÌåÓýapp disposal proceeds received from the company consist of two elements, a return of the capital on the shares and the balance which is treated as a distribution (in the case of individuals) and subject to Income Tax under ITTOIA05/S383 or qualifying investment income (in the case of companies).

A distribution received by the individual can be subject to Income Tax. »Ê¹ÚÌåÓýappre can still be a disposal for Capital Gains Tax purposes. »Ê¹ÚÌåÓýapp amount chargeable to CGT would be the total amount of consideration received for the shares, net of any amount subject to Income Tax as per TCGA92/S37 (see CG11890).

Additionally, a purchase by a company of its own shares attracts a Stamp Duty liability under FA86/S66 on the return it submits to the Registrar of Companies. See STSM075020 for further details.