Buying Shares In Company Name

[joey122]

Does anyone know the tax situation on buying shares in a company name??

Say I have 100K and have paid corporation tax on this - If I invest this and earn 10K do I pay corporation tax on the profit made?

And what about losses - How are they treated??

[Olly]

do I pay corporation tax on the profit made?

And what about losses - How are they treated??

Yes
and
Don't know

[Maslins]

Varies hugely depending on what you're buying. In particular, what size shareholding.

If your company buys >75% of another company, they can pretty much pass losses between them (ie 1 co makes £100k profit, other makes £100k loss, you can net these off).

Assuming you're only going to be buying a much smaller shareholding you'll only be taxed based on dividends received, and even then they're typically tax free assuming the shares are in a UK company.

Lots of variables can lead to lots of different outcomes.

Irrespective of what kind of shares you're buying, if it's only a small shareholding, you'll often be better off buying them in your own name (as opposed to via the Ltd Co). Main reason being if you sell at a gain you'll get £10k tax free and only be taxed at 10-18% on any remaining gain. Chances are your company would pay much higher tax on any future disposal, but again lots of variables can lead to lots of different situations.

Have a think about exactly what you want to purchase, then go have a chat with your accountant and they can more accurately run through your options.

[ASB]

Assuming you're only going to be buying a much smaller shareholding you'll only be taxed based on dividends received, and even then they're typically tax free assuming the shares are in a UK company.

How would they typically be tax free? Surely it's just other income and subject to CT accordingly (much like an individual would pay income tax - though usually offset by the tax credit). Are you saying that the notional tax credit is reclaimable if held in corporate name?

I guess there is also the theoretical risk of getting reclassified as an investment company - but not at all likely of course.

[Maslins]

Dividends received from UK companies where you own <50% are treated as franked investment income. These are not taxable on the recipient company, but may potentially put them into a higher tax bracket.

Here is a reasonably good explanation if you're interested, dividend bit on page 3...though it is several years out of date so tax rates no longer correct.

The profits have already suffered CT in the company paying the divi out, so makes sense they don't suffer it again.

[Olly]

I'm guessing, and it's a fair guess I think, that the OP was talking about trading shares rather than holding them for dividend purposes.
He's only got 20K in the Co from another post, wonder if he's taken full "tax free" personal income out CO profit yet (salary+divs, approx 36K)
Interesting about no further tax on dividends....ta

[joey122]

Dividends received from UK companies where you own <50% are treated as franked investment income. These are not taxable on the recipient company, but may potentially put them into a higher tax bracket.

Here is a reasonably good explanation if you're interested, dividend bit on page 3...though it is several years out of date so tax rates no longer correct.

The profits have already suffered CT in the company paying the divi out, so makes sense they don't suffer it again.

Hmm - Thanks for this

My question is actually quite simple - Can I buy UK gilts and receive the dividends (coupons) - Will these be corporation taxed?

Put simply I d rather hold an interest bearing asset then letting abbey hold funds for 0% APR.

On top of this what happens if the gilts appreciate and results in a hypothetical 10K profit?

[TheFaQQer]

Hmm - Thanks for this

My question is actually quite simple - Can I buy UK gilts and receive the dividends (coupons) - Will these be corporation taxed?

Put simply I d rather hold an interest bearing asset then letting abbey hold funds for 0% APR.

On top of this what happens if the gilts appreciate and results in a hypothetical 10K profit?

I'd suggest that you ask your accountant rather than just a bunch of strangers on t'interweb.

[DiscoStu]

I'd suggest that you ask your accountant rather than just a bunch of strangers on t'interweb.

Given the amount of accountancy questions joey asks I think it's safe to assume he hasn't got round to finding one yet...

[RichardCranium]

Given the amount of accountancy questions joey asks I think it's safe to assume he hasn't got round to finding one yet...

unless joey is an accountant's sockpuppet, created just so an accountant can respond...