UUÂãÁÄÖ±²¥

Type 1 (direct) statutory demerger ― tax implications

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance

Type 1 (direct) statutory demerger ― tax implications

Produced by a Tolley Corporation Tax expert
Corporation Tax
Guidance
imgtext

This guidance note deals with the tax consequences for shareholders and companies involved in a type 1 (direct) statutory demerger. For an introduction to statutory demergers, including an overview and diagrams of the three permitted types of demerger, conditions for a statutory demerger, chargeable payments and clearances and reporting, see the Statutory demergers ― overview guidance note.

For overall guidance on demergers, including choice of the most appropriate route and planning the demerger project, see the Demergers ― overview guidance note.

Statutory demergers are sometimes referred to as exempt demergers.

Type 1 ‘Direct demerger’ ― overview

In a Type 1 demerger (also known as a direct dividend demerger), separate groups of shareholders acquire shares in separate 75% subsidiaries from the original holding company. It is permitted for all or any of the shareholders to acquire shares in this way.

A simple illustration of a Type 1 demerger is as follows:

The following is a diagram of a direct demerger of two trading subsidiaries to different shareholders:

Reliefs for shareholders

Provided

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+â„¢
Powered by
  • 15 May 2024 10:50

Popular Articles

Foreign tax relief

Foreign tax reliefIncome and gains may be taxable in more than one country. The UK has three ways of ensuring that the individual does not bear a double burden:1)treaty tax relief may reduce or eliminate the double tax2)if there is no treaty, the individual can claim ‘unilateral’ relief by deducting

14 Jul 2020 11:44 | Produced by Tolley Read more Read more

Reverse charge ― buying in services from outside the UK

Reverse charge ― buying in services from outside the UKThis guidance note covers the reverse charge that applies to services that have been bought in from outside the UK. For an overview of VAT and international services more broadly, see the International services ― overview guidance note. For

15 Dec 2020 14:02 | Produced by Tolley Read more Read more

Self assessment ― amendments and corrections

Self assessment ― amendments and correctionsOnce a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the

14 Jul 2020 13:37 | Produced by Tolley Read more Read more