Tax considerations for shareholders in the ICG Enterprise Trust plc buyâback
A shareârepurchase is treated as a capitalâtransaction, not a dividend. When you tender shares and receive cash, the proceeds are compared with your original costâbasis to determine a capital gain or loss. In most jurisdictions the gain is taxed at the applicable shortâ or longâterm capitalâgains 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 longâterm rate; a shorter holding period will trigger the higher shortâterm rate. Any loss can be used to offset other capital gains in the same tax year, offering a potential taxâlossâharvesting opportunity if the buyâback price is below your costâbasis.
Because the buyâback is a cash tender, withholding tax may be applied at the time of settlement, especially for nonâresident shareholders. You should verify the local tax rules (e.g., UKâs âshareârepurchase taxâ or US âSection 1244â treatment) to understand whether a final tax filing will be required to reconcile the withheld amount against your actual tax liability. For taxâadvantaged accounts (e.g., ISA, SIPP, or a US Roth/Traditional IRA), the cash receipt is generally taxâfree, so participating from those vehicles can eliminate the capitalâgain exposure entirely.
Actionable insight:
- Review your individual costâbasis and holding period before tendering to gauge the net afterâtax return.
- If you are a nonâresident, factor in potential withholding and consider filing a reclaim claim where applicable.
- For taxable accounts, weigh the buyâbackâs premium against the expected capitalâgains tax; if the premium is modest, you may prefer to retain the shares for future upside rather than incur a higher afterâtax cost.
Overall, the buyâback can be an attractive way to realize a return, but the afterâtax outcome hinges on your holding period, costâbasis, residency status, and whether the transaction occurs inside a taxâadvantaged wrapper. Adjust your participation size accordingly to optimise the net return.