Income and Corporation Taxes Act 1988

Stock dividends U.K.

249 Stock dividends treated as income. U.K.

(1) M1 Subject to [F1 subsections (8) and (9) below, this section applies (and accordingly section 230 above and section 410 of ITTOIA 2005 apply)] to any of the following share capital, that is to say—

(a) any share capital issued by a company resident in the United Kingdom in consequence of the exercise by any person of an option conferred on him to receive in respect of shares in the company (whether the last-mentioned shares were issued before or after the coming into force of this section) either a dividend in cash or additional share capital; and

(b) any bonus share capital issued by a company so resident in respect of any shares in the company of a relevant class (whether the last-mentioned shares were issued before or after the coming into force of this section).

(2) For the purposes of subsection (1)(b) above a class of shares is a relevant 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) Where a company issues any share capital in a case in which two or more persons are entitled thereto, the following provisions of this sectionand paragraph 12(1)to (3)of Schedule 19 F2 shall have effect as if the company had issued to each of those persons separately a part of that share capital proportionate to his interest therein on the due date of issue.

(4) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Where, in a case within [F4 section 410(2), (3) or (4) of ITTOIA 2005], the share capital in question is issued in respect of shares in the company issued before 6th April 1975 which confer on the holder a right to convert or exchange them into or for shares of a different class, this section shall not apply to so much (if any) of any bonus share capital issued by the company after 5th April 1976 in connection with an exercise of that right as would have been issued if that right had been exercised so as to effect the conversion or exchange of the shares on the earliest possible date after 5th April 1975; F5 . . . .

(9) Where any bonus share capital falling within subsection (1)(b) above is after 5th April 1975 converted into or exchanged for shares in the company in question of a different class, then—

(a) this section shall not apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of that bonus share capital; but

(b) section 230(a) and (b) shall apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of so much of that bonus share capital as caused [F6 income to be treated as arising to an individual as a result of section 410(2) of ITTOIA 2005] on the due date of issue (or would have done so if the case had been one in which an individual was beneficially entitled to that share capital).

Textual Amendments

F1 Words in s. 249(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch 1 para. 119(2)

F2 Words repealed by 1989 s.187and Sch.17 Part Vin relation to accounting periods beginning after 31March 1989.

F3 S. 249(4)-(7) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 119(3), Sch. 3 (with Sch. 2)

F4 Words in s. 249(8) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by virtue of Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 119(4)(a) (with Sch. 2)

F5 Words in s. 249(8) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 119(4)(b), Sch. 3 (with Sch. 2)

F6 Words in s. 249(9)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 119(5) (with Sch. 2)

Modifications etc. (not altering text)

C1 See Sch.10 para.5—profit sharing schemes.

Marginal Citations

M1 Source—1975 (No.2) s.34(1)-(6)

250 Returns. U.K.

(1) M2 A company shall for each of its accounting periods make, in accordance with this section, returns to the inspector of all share capital to which section 249 applies (“relevant share capital”) and which was issued by it in that period.

(2) M3 A return shall be made for—

(a) each complete quarter falling within the accounting period, that is to say, each of the periods of three months ending with 31st March, 30th June, 30th September or 31st December which falls within that period;

(b) each part of the accounting period which is not a complete quarter and ends on the first (or only), or begins immediately after the last (or only), of those dates which falls within the accounting period;

(c) if none of those dates falls within the accounting period, the whole accounting period.

(3) A return for any period for which a return is required to be made under this section (a “return period”) shall be made within 30 days from the end of that period.

(4) M4 No return need be made under this section by a company for any period in which it has issued no relevant share capital.

(5) The return made by a company for any return period shall state—

(a) the date on which any relevant share capital issued by it in the period was issued and, if different, the date on which the company was first required to issue it;

(b) particulars of the terms on which any such share capital so issued by it was issued; and

(c) what is, in relation to any such share capital so issued, [F7 the cash equivalent of the share capital in accordance with section 412 of ITTOIA 2005].

(6) If it appears to the inspector that a company ought to have, but has not, made a return for any return period, he may (notwithstanding subsection (4) above) by notice require the company to make a return for that period within such time (not being less than 30 days) as may be specified in the notice; and a return required to be made under this subsection shall, if such be the case, state that no relevant share capital was issued in the period in question.

(7) As regards any share capital included in a return made under this section by a company, the inspector may by notice require the company to furnish him within such time (not being less than 30 days) as may be specified in the notice with such further information relating thereto as he may reasonably require for the purposes of sections 230 and 249, this section and section 251 F8 . . . [F9 of this Act or Chapter 5 of Part 4 of ITTOIA 2005].

Textual Amendments

F7 Words in s. 250(5)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 120(2) (with Sch. 2)

F8 Words in s. 250(7) repealed by Finance Act 1989 (c. 26), s. 187, Sch. 17 Part V (in relation to accounting periods beginning after 31 March 1989).

F9 Words in s. 250(7) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 120(3) (with Sch. 2)

Marginal Citations

M2 Source—1975 (No.2) Sch.8 7(1)

M3 Source—1975 (No.2) Sch.8 7(2)

M4 Source—1975 (No.2) Sch.8 7(3)-(6)

251 Interpretation of sections 249 and 250. U.K.

M5 (1) For the purposes of sections 249 and 250 —

(a) “bonus share capital”, in relation to a company, means share capital issued by the company otherwise than wholly for new consideration or such part of any share capital so issued as is not properly referable to new consideration;

(b) “due date of issue”, in relation to any share capital issued by a company, means the earliest date on which the company was required to issue that share capital;

(c) an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person’s abandonment of, or failure to exercise, such a right is to be treated as an exercise of the option;

and in section 254 the definition of “security” (in subsection (1)) and subsections (5) and (11) shall not apply.

(2) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 S. 251(2)-(6) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 121, Sch. 3 (with Sch. 2)

Modifications etc. (not altering text)

C2 S. 251(1)(c) applied (19.3.1997) by Finance Act 1997 (c. 16), Sch. 7 para. 4(2)

Marginal Citations

M5 Source—1975 (No.2) s.34(8)(a)-(d)