Taxes Consolidation Act 1997 section 176A

Purchase of own shares – supplementary

Section 176A restricts the tax deductibility of costs incurred by a company when it buys back its own shares, while preserving deductions for certain employee-related share transactions.

• Costs incurred by a company in buying back its own shares are not allowable as a deduction against profits for tax purposes.
• This applies to share buy-backs that are not treated as distributions under section 175 (quoted companies) or section 176 (unquoted companies).
• The restriction does not apply where the expenditure relates to shares acquired by the company and given as consideration for goods or services, or given to an employee or director of the company.
• Deductions permitted under section 81(2)(n) are preserved, covering payments at market value for employee share arrangements and employee share option schemes with connected companies.