Section 410 | When stock dividend income arises

(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.

(1A)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.

(2)If an individual is beneficially entitled to that share capital, income is treated as arising to the individual.

(3)If—

(a)the share capital is issued to trustees in respect of shares they hold in the company (alone or with others), and

(b)a cash dividend paid to them in respect of the shares would have been to any extent accumulated or discretionary income (as defined in section 480 of ITA 2007 but excluding income arising under a charitable trust or an unauthorised unit trust in relation to which regulation 12 of the Unauthorised Unit Trusts (Tax) Regulations 2013 applies) ,

income is treated as arising to the trustees.

(4)If the share capital is issued to personal representatives during the administration period, income is treated as arising (but see section 413(4)).

(5)In subsection (4) “administration period” has the meaning given by section 653.

(6)Income within this section is treated as arising on the earliest date on which the company is required to issue the share capital in question.

(7)See section 413(5) (apportionment) if two or more persons are entitled to the share capital.

(8)There are special rules in paragraph 78A of Schedule 2 for share capital issued in respect of shares issued before 6 April 1975.