Section 1049 — Corporation Tax Act 2010: Stock dividends

Stock dividends 1049 1 This section applies to—

a share capital issued by a UK resident company in lieu of a cash dividend, and b bonus share capital issued by a UK resident company in respect of shares in the company of a qualifying class.

2 For the purposes of subsection (1)(b) shares are of a qualifying class if—

a shares of that class carry the right to receive bonus share capital in the company (of the same or a different class),

and b that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.

3 If the share capital is issued in a case where section 410(2), (3) or (4) of ITTOIA 2005 (stock dividend income) applies—

a the share capital does not, despite paragraph C in section 1000(1) (redeemable share capital), constitute a distribution within the meaning of section 1000(1),

and b the share capital is not, for the purposes of—

i section 1022 (bonus issues following repayment of share capital), or ii section 1026 (distributions following a bonus issue), treated as issued “as paid up otherwise than by the receipt of new consideration”.

4 This section is subject to—

a section 1050, and b paragraph 108 of Schedule 2 (special rules for share capital issued in respect of shares issued before 6 April 1975).