Changes to company distribution rules – Autumn Budget 2026

Further to the government’s consultation earlier in the year on modernising the distributions and repayments of capital from companies, the responses have now been published.

Whilst the original proposals have been curtailed somewhat based on responses to the consultation, from 6 April 2028 the rules for taking money or assets out of a company will change.

Similar transactions will be taxed more consistently, whatever legal form is used or where the company is based. After a share reorganisation, the amount treated as a capital repayment will generally be limited to the capital originally subscribed. This restriction will only apply to reorganisations taking place after the new rules begin.

The reforms will also update the rules for share buybacks and demergers, whilst protecting genuine commercial and succession transactions. The tax treatment of ordinary dividends and genuine sales of shares to another person or business will not change.

Draft legislation will be published in 2027. Owner-managed and family businesses considering a reorganisation should review their plans early and take advice before acting.

If the Budget has raised any questions for you, book your place on our question time webinar this Friday at 9:30am.   Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.