Companies which make stock dividends are obliged to submit returns to HMRC. Stock dividends may also be referred to as scrip dividends or bonus issues.

Meaning of ‘stock dividend’

A ‘stock dividend’ is any share capital issued by a company which is resident in the UK:

(1)as a result of a person owning shares in the company exercising his right to receive them instead of a cash dividend; or

(2)as a bonus issued in relation to shares:

(a)which carry a right to receive bonus share capital (see CTA 2010, s. 1051(1)) of the same or a different class; and

(b)by which that right is given by the terms of issue (and any later variation) of the shares of that class

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