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Practice notes
Article Summary
This practice note explains the concept of ordinary share capital and why it is important for UK tax purposes. It outlines the key tax reliefs that require ordinary share capital, including no gain/no loss treatment on intragroup transfers, corporation tax group relief, substantial shareholdings exemption, share for share exchanges, business asset disposal relief, relief for employee share acquisitions, and EIS and SEIS relief. The note then considers the definition of ordinary share capital for UK tax purposes. It explains that ordinary share capital is defined as all issued share capital other than capital whose holders have a right to a fixed dividend but no other profit share. Relevant case law on defining ordinary share capital is summarised. Guidance from HMRC on identifying ordinary share capital is outlined, including factors to consider for foreign entities. Examples are given of shares HMRC accepts and does not accept as ordinary share capital.
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