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Corporate Ownership and Control in the UK: The Tax Dimension


  • Brian R. Cheffins,

    1. Faculty of Law, University of Cambridge.
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  • Steven A. Bank

    1. UCLA School of Law
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    • aUCLA School of Law. The authors are grateful for feedback from Marco Bigelli, Mihir Desai, two anonymous referees and participants at seminars at Bologna, Georgetown, the University of Toronto and at a symposium of tax on corporate governance in Munich.


While generally the impact tax has on patterns of corporate ownership and control has received little attention in the relevant academic literature, this paper argues that tax is potentially an important determinant of ownership patterns in large companies. The paper focuses on historical developments in Britain, where an ‘outsider/arm's-length’ system of corporate governance took shape during the twentieth century and became fully entrenched by the end of the 1970s. Taxes imposed on corporate profits, taxation of managerial and investment income and inheritance taxes help to explain why during this period blockholders sought to exit and why there was sufficient demand for shares among investors to permit ownership to separate from control.