What are the potential tax implications for shareholders participating in the buyback? | ICG (Aug 15, 2025) | Candlesense

What are the potential tax implications for shareholders participating in the buyback?

Tax considerations for shareholders in the ICG Enterprise Trust plc buy‑back

A share‑repurchase is treated as a capital‑transaction, not a dividend. When you tender shares and receive cash, the proceeds are compared with your original cost‑basis to determine a capital gain or loss. In most jurisdictions the gain is taxed at the applicable short‑ or long‑term capital‑gains rate, depending on how long you have held the shares. If you have held the ICG shares for more than a year, the profit will be subject to the lower long‑term rate; a shorter holding period will trigger the higher short‑term rate. Any loss can be used to offset other capital gains in the same tax year, offering a potential tax‑loss‑harvesting opportunity if the buy‑back price is below your cost‑basis.

Because the buy‑back is a cash tender, withholding tax may be applied at the time of settlement, especially for non‑resident shareholders. You should verify the local tax rules (e.g., UK’s “share‑repurchase tax” or US “Section 1244” treatment) to understand whether a final tax filing will be required to reconcile the withheld amount against your actual tax liability. For tax‑advantaged accounts (e.g., ISA, SIPP, or a US Roth/Traditional IRA), the cash receipt is generally tax‑free, so participating from those vehicles can eliminate the capital‑gain exposure entirely.

Actionable insight:

- Review your individual cost‑basis and holding period before tendering to gauge the net after‑tax return.

- If you are a non‑resident, factor in potential withholding and consider filing a reclaim claim where applicable.

- For taxable accounts, weigh the buy‑back’s premium against the expected capital‑gains tax; if the premium is modest, you may prefer to retain the shares for future upside rather than incur a higher after‑tax cost.

Overall, the buy‑back can be an attractive way to realize a return, but the after‑tax outcome hinges on your holding period, cost‑basis, residency status, and whether the transaction occurs inside a tax‑advantaged wrapper. Adjust your participation size accordingly to optimise the net return.