Income Tax (Trading and Other Income) Act 2005

410 When stock dividend income arises

(1) This section applies if share capital is issued as mentioned in section 249(1)(a) or (b) of ICTA (certain share capital issued by UK resident companies in lieu of dividends or as bonus share capital).

(2) If an individual is beneficially entitled to that share capital, income is treated as arising to the individual.

(3) If—

(a) the share capital is issued to trustees in respect of shares they hold in the company (alone or with others), and

(b) a cash dividend paid to them in respect of the shares would have been to any extent income to which section 686 of ICTA applies (accumulation and discretionary trusts: special rates of tax),

income is treated as arising to the trustees.

(4) If the share capital is issued to personal representatives during the administration period, income is treated as arising (but see section 413(4)).

(5) In subsection (4) “administration period” has the meaning given by section 653.

(6) Income within this section is treated as arising on the earliest date on which the company is required to issue the share capital in question.

(7) See section 413(5) (apportionment) if two or more persons are entitled to the share capital.