Corporation Tax Act 2010 section 741

Abnormal dividends: the excessive return condition

Section 741 defines when a dividend is considered an "excessive return" for the purposes of the abnormal dividends rules, by comparing the dividend received against what would be a normal return on the recipient's investment in the relevant securities.

• A dividend meets the excessive return condition if it substantially exceeds a normal return on the consideration the recipient provided for the relevant securities
• Relevant securities include both the securities on which the dividend was paid and any earlier securities from which those were derived
• Whether a dividend exceeds a normal return is assessed by reference to how long the recipient held the securities and what dividends or distributions were received during that period
• Where the recipient overpaid for the securities or provided no consideration at all, the market value at acquisition is treated as the consideration provided