The distributions legislation aims to ensure that if a company gives anything to one of its members without the member giving full payment in return, then a tax liability arises.

The legislation applies where the company passes money or assets to members or shareholders in their capacity as members. It does not apply where the company pays members or shareholders for services to the company. Such payments are covered by the provisions of ITEPA03.

(Prior to 6 April 2003 the Schedule E rules applied).

Distributions received by individuals are assessable as income under ITTOIA05/S383.

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