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Devil in the detail

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02 April 2013
Issue: 4396 / Categories: Forum & Feedback , Companies

A company holds shares in listed companies, unit trusts and open-ended investment companies. Advice is required on the scrip dividends received

My client is a limited company which now exists mainly to hold investments and is operated by two equal shareholders. The only significant assets of the company are investments in listed company shares unit trusts and open-ended investment companies (OEICs).

My query is regarding the treatment of scrip dividends ie bonus shares received by the company in respect of certain listed shareholdings.

It would appear to be the case looking at the Capital Gains Manual CG58790 and at CTA 2010 s 1049 that any bonus shares or scrip dividends received by the company on quoted shareholdings are not subject to tax in the company. This is because dividend income received by this small company would appear to be exempt from corporation tax.

In addition it would appear that such bonus shares are treated as acquired for no consideration so that ...

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