Income and Corporation Taxes Act 1988

303 Value received by persons other than claimants. U.K.

[F2 (1) Where, in the case of an issue of eligible shares in a company, any relief is attributable to any shares comprised in the issue which are held by an individual, subsection (1A) below shall apply if at any time in the [F3 period of restriction] the company or any subsidiary—

(a) repays, redeems or repurchases any of its share capital which belongs to any member other than that individual or a person who falls within subsection (1B) below, or

(b) makes any payment to any such member for giving up his right to any of the share capital of the company or subsidiary on its cancellation or extinguishment.

(1A) The relief—

(a) if it is greater than the amount mentioned in subsection (1C) below, shall be reduced by that amount, and

(b) if paragraph (a) above does not apply, shall be withdrawn.

[F4 (1AA) This section is subject to [F5 sections 303AA and 303A].]

(1B) A person falls within this subsection if the repayment, redemption, repurchase or payment in question—

(a) causes any relief attributable to his shares in the company to be withdrawn or reduced by virtue of section 299 or 300(2)(a), or

(b) gives rise to a qualifying chargeable event (within the meaning of paragraph 14(4) of Schedule 5B to the 1992 Act) in respect of him [F6 ; or

(c) causes any investment relief [F7 attributable to shares held by that person] (within the meaning of Schedule 15 to the Finance Act 2000) to be withdrawn or reduced by virtue of paragraph 46 (disposal of shares) or 49(1)(a) (repayment etc. of share capital or securities) of that Schedule;]

[F8 or it would have the effect mentioned in paragraph (a), (b) or (c) above were it not a receipt of insignificant value for the purposes of section 300 above, paragraph 13 of Schedule 5B to the 1992 Act or paragraph 47 of the Finance Act 2000, as the case may be].

(1C) The amount referred to in subsection (1A) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given—

(a) where subsection (1) above does not apply in the case of any other individual, on the amount [F9 received] by the member;

(b) where that subsection also applies in the case of one or more other individuals, on the appropriate fraction of that amount;

and subsection (4) of section 299 applies for the purposes of this subsection as it applies for the purposes of subsection (2) of that section.

(1D) In subsection (1C) above “the appropriate fraction” is—

where—

• A is the amount subscribed by the individual for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable;

• B is the aggregate of that amount and the amount or amounts subscribed by the other individual or individuals for such shares.

(2) Where the repayment, redemption, repurchase or payment mentioned in subsection (1) above falls within [F10 the applicable periods] for two or more issues of eligible shares in the company, subsection (1A) above shall have effect in relation to each of those issues as if the amount receivable by the member were reduced by multiplying it by the fraction—

where—

• C is the amount subscribed by individuals for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable;

• D is the aggregate of that amount and the corresponding amount or amounts for the other issue or issues.]

[F11 (2A) For the purposes of subsection (2) above “the applicable period” for an issue of eligible shares is—

(a) if the shares were issued before 6th April 2000, the period beginning two years before the issue of the shares and ending immediately before the fifth anniversary of the issue date,

[F12 (b) if the shares were issued on or after 6th April 2000 but before 7th March 2001, the period beginning two years before the issue of the shares and ending immediately before the termination date relating to those shares,

(c) in any other case, the period of restriction for the issue.]]

(3) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F14 (6A) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(7) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) F15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) Where—

(a) a company issues share capital (“the original shares”) of nominal value equal to the authorised minimum (within the meaning of the M1 Companies Act 1985) for the purposes of complying with the requirements of section 117 of that Act (public company not to do business unless requirements as to share capital complied with); and

(b) after the registrar of companies has issued the company with a certificate under section 117, it issues eligible shares;

subsection (1) above shall not apply in relation to any redemption of any of the original shares within 12 months of the date on which those shares were issued.

In relation to companies incorporated under the law of Northern Ireland references in this subsection to the Companies Act 1985 and to section 117 of that Act shall have effect as references to the M2 Companies (Northern Ireland) Order 1986 and to Article 127 of that Order.

[F16 [F17 (9A) References in this section [F18 and [F19 sections 303AA and 303A]] to a subsidiary of a company are references to a company which at any time in the relevant period is a 51 per cent. subsidiary of the first mentioned company, whether or not it is such a subsidiary at the time of the repayment, redemption, repurchase or payment in question F20 . . . .]

(9B) Section 312(1A)(a) applies to determine the relevant period for the purposes of this section.]

(10) F21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) F21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 S. 303(1)(1A)-(1D)(2) substituted for s. 303(1)-(2) (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 15(1)

F3 Words in s. 303(1) substituted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(1)

F4 S. 303(1AA) inserted (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 16 para. 2(2)(a)

F5 Words in s. 303(1AA) substituted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(2)

F6 S. 303(1B)(c) and preceding word inserted (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 16 para. 2(2)(b)

F7 Words in s. 303(1B)(c) inserted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(3)(a)

F8 Words in s. 303(1B) inserted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(3)(b)

F9 Word in s. 303(1C)(a) substituted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(4)

F10 Words in s. 303(2) substituted (with effect as mentioned in Sch. 17 para. 8 of the amending Act) by Finance Act 2000 (c. 17), Sch. 17 para. 5(3)

F11 S. 300(2A) inserted (with effect as mentioned in Sch. 17 para. 8 of the amending Act) by Finance Act 2000 (c. 17), s. 64, Sch. 17 para. 5(4)

F12 S. 303(2A)(b)(c) substituted for s. 303(2A)(b) (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(5)

F13 S. 303(3)-(7) repealed (with effect in accordance with Sch. 15 para. 40(3) of the repealing Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(6), Sch. 33 Pt. 2(3), Note 2

F14 S. 303(6A) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 17(c)

F15 S. 303(8) repealed (with effect as mentioned in s. 137(1)(2), Sch. 26 Pt. 5(17) Note of the repealing Act) by Finance Act 1994 (c. 9), Sch. 15 para. 17(d), Sch. 26 Pt. 5(17)

F16 S. 303(9A)(9B) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 17(e)

F17 S. 303(9A) substituted) (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 15(3)

F18 Words in s. 303(9A) inserted (with effect in accordance with Sch. 15 para. 40(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 19(7)

F19 Words in s. 303(9A) substituted (with effect in accordance with Sch. 18 para. 7(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 7(1)

F20 Words in s. 303(9A) repealed (with effect in accordance with Sch. 15 para. 40(3) of the repealing Act) by Finance Act 2001 (c. 9), Sch. 33 Pt. 2(3), Note 2

F21 S. 303(10)(11) repealed (with effect as mentioned in s. 137(1)(2), Sch. 26 Pt. 5(17) Note of the repealing Act) by Finance Act 1994 (c. 9), Sch. 15 para. 17(f), Sch. 26 Pt. 5(17)

Marginal Citations

M1 1985 c. 6.

M2 S.I. 1986/1032 (N.I. 6)