Scheme Circular - Rolls-Royce

US Shareholders should note that no appraisal or similar rights of dissenting shareholders are to apply in connection with the Scheme as none are
required as a matter of English law.
13. TAXATION
General
The following section is a summary guide only to certain aspect s of tax in the UK and the US. This is not a complete analysis of the potential tax
effects of the Proposals nor will it relate to the specific tax position of all Rolls-Royce Holdings Shareholders in all jurisdictions. This summary does
not purport to be a legal opinion. Shareholders are advised to consult their own tax advisers as to the effects of the Proposals in relevant jurisdictions.
13.1 UK Taxation
The following summary is intended as a general guide only and relate s only to certain limited aspects of the UK tax consequences for
Shareholders of the Scheme and of disposing of Rolls-Royce Holdings Ordinary Shares. It is based on current UK tax law and what is understood
to be the current practice of HMRC, both of which are subject to change, possibly with retrospective effect. The summary applies only to
Shareholders who are resident and, if individuals, ordinarily resident and domiciled in the UK for taxation purposes, who hold their Rolls-Royce
Group Ordinary Shares and Rolls-Royce Holdings Ordinary Shares as an investment (other than under an individual savings account), who are
the absolute beneficial owners of their Rolls-Royce Group Ordinary Shares and their Rolls-Royce Holdings Ordinary Shares, who have not (and
are not deemed to have) acquired their Rolls-Royce Group Ordinary Shares and their Rolls-Royce Holdings Ordinary Shares by virtue of an office
or employment (whether current, historic or prospective) and are not officers or employees of any member of the Group. In addition, these
comments may not apply to certain classes of Rolls-Royce Holdings Shareholder such as dealers in securities, collective investment schemes
and insurance companies.
If you are in any doubt about your tax position, you should consult your own professional adviser without delay.
UK tax consequences of the cancellation of Rolls-Royce Group Ordinary Shares and issue of Rolls-Royce Holdings Ordinary Shares
For the purposes of UK capital gains tax and corporation tax on chargeable gains (CGT), the cancellation of the Rolls-Royce Group Ordinary Shares
and the issue of Rolls-Royce Holdings Ordinary Shares should be treated as a scheme of reconstruction. UK resident Shareholders who do not hold
(either alone or together with connected persons) more than 5 per cent. of, or of any class of, shares in or debentures of Rolls-Royce Group should
obtain rollover relief in respect of the cancellation of Rolls-Royce Group Ordinary Shares and the issue to them of the Rolls-Royce Holdings Ordinary
Shares. This means that the Rolls-Royce Holdings Ordinary Shares issued to a Shareholder should be treated as the same asset, and as having been
acquired at the same time and for the same consideration, as his Rolls-Royce Group Ordinary Shares from which they are derived.
Shareholders who hold (alone, or together with connected persons) more than 5 per cent. of, or of any class of, shares in or debentures of Rolls-Royce
Group will be eligible for the above treatment only if the Scheme is effected for bona fide commercial reasons and does not form part of a scheme
or arrangements of which the main purpose, or one of the main purposes, is avoidance of a liability to capital gains tax or corporation tax. If these
conditions are not met, then such a Rolls-Royce Group Shareholder will be treated as receiving Rolls-Royce Holdings Ordinary Shares in consideration
for the cancellation of his Rolls-Royce Group Ordinary Shares and as having made a disposal of his Rolls-Royce Group Ordinary Shares which may,
depending on individual circumstances, give rise to a chargeable gain or allowable loss for CGT purposes. Confirmation has been obtained from
HMRC under section 138 of the Taxation of Chargeable Gains Act 1992 such that the Scheme can be regarded as satisfying these conditions, that is,
it is being undertaken for bona fide commercial reasons.
Rolls-Royce Holdings Reduction of Capital
The Rolls-Royce Holdings Reduction of Capital should not have any UK tax consequences for Rolls-Royce Holdings Shareholders. In particular it
should not result in a disposal by any Rolls-Royce Holdings Shareholders of any of their Rolls-Royce Holdings Ordinary Shares.
Transactions in securities
Rolls-Royce Group has been advised that Shareholders should not be subject to a counteracting tax assessment in relation the Scheme or the Rolls-
Royce Holdings Reduction of Capital under the “transactions in securities” provisions of sections 682 to 713 of the Income Tax Act 2007 in relation
to income tax payers or section 733 of the Corporation Tax Act 2010 in relation to corporation tax payers. Rolls-Royce Group has not considered it
necessary that a clearance need be sought from HMRC to confirm this.
UK stamp duty and stamp duty reserve tax (SDRT) consequences of the Scheme
No stamp duty or SDRT will be payable by Shareholders as a result of the cancellation of Rolls-Royce Group Ordinary Shares and issue of Rolls-Royce
Holdings Ordinary Shares under the Scheme (including the issue of Rolls-Royce Holdings Ordinary Shares to the US Depositary in respect of Rolls-
Royce ADRs as replacements for the Rolls-Royce Group Ordinary Shares held by the US Depositary).
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