Taxes Consolidation Act 1997 section 583

Capital distributions by companies

Section 583 provides that where a shareholder receives a capital distribution from a company, the distribution is treated as a part disposal of the shareholder's shares for capital gains tax purposes.

• A capital distribution is any distribution from a company, including a distribution on a winding up, in money or money's worth, other than a distribution which is taxable as income in the hands of the recipient.
• Where a shareholder receives a capital distribution (other than a distribution of new shares dealt with under section 584), the shareholder is treated as having disposed of an interest in the shares in consideration of the capital distribution received.
• The normal part disposal rules under section 557 apply, so that a proportion of the original cost of the shares is set against the distribution to compute the chargeable gain.
• Revenue has confirmed that a charge under section 583 will not be imposed where a capital distribution arises purely from an internal group restructuring undertaken for bona fide purposes.