There may be occasions where, rather than paying a dividend in cash, it is decided that a distribution of assets (often a property) would be preferable; this is called a ‘dividend in specie’.
So long as there is no obligation to pay a dividend, no SDLT liability will arise because there is no chargeable consideration. However, there are a couple of traps that are easy to fall into.
This is becoming more commonplace since the changes in rules as to what constitutes distributable reserves for a company. Balancing the wording of the Board Minutes to demonstrate that the directors have considered the value of the property to be distributed to ensure they have adequate reserves, whilst making as little reference to this within the dividend declaration itself requires some very precise drafting!
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