Income and Corporation Taxes Act 1988

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)