Modernising the distributions framework

The rules concerning what constitutes a distribution for tax purposes have remained largely unchanged since 1965.

This consultation seeks views on proposals to update seven parts of these rules, where legislation has not kept pace with commercial practice. The proposals aim to improve clarity and consistency, by reducing unintended differences in tax treatment and the scope for error and non-compliance. We intend to ensure that genuine commercial activity is not affected and wider impacts on investment and attractiveness are fully considered.

The focus of this consultation is where the shareholder is an individual; the proposals are not intended to affect corporate shareholders directly.