A Strange Situation - Shares Ltd Company

[TheCyclingProgrammer]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

[kirkdon]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

Okay that seems like a valid option I read something about adding new shares to the company. Would you say that's the easiest way?

[TheCyclingProgrammer]

Okay that seems like a valid option I read something about adding new shares to the company. Would you say that's the easiest way?

It should be as long as your articles of association allow it. It should do. You should still get your accountant to assist you but in short you:

* Declare as the director that you are issuing new shares. This ought to be a minuted director's meeting.
* Create a share certificate
* Update the company register
* Notify companies house within 30 days using form SH01 and also provide a statement of capital.

https://www.rapidformations.co.uk/bl...mited-company/

I would certainly not complicate things by messing around with different share classes either; issue ordinary shares, the same class as the existing ones.

[ContrataxLtd]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

[TheCyclingProgrammer]

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

Another reason why OP should talk to their accountant first although it does sound like in this case the company hasn't started trading yet so shouldn't really have any value yet.

I didn't think unmarried couples were considered connected for CGT purposes anyway?

[Martin at NixonWilliams]

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

+1

This is known as 'value shifting'.

For example. If the company was worth £10k and you issued an extra 100 shares, your share of the company's value becomes £5k. You would be seen to have made a disposal and would pay CGT accordingly.

There are other ways you can be caught. For example if they each had 100 ordinary shares in the company and then changed 100 of the 200 relating to shareholder 1 to say, 'A' shares with less rights, clearly value has shifted and so the person who transfers value is deemed to make a disposal at market value.

[kirkdon]

It should be as long as your articles of association allow it. It should do. You should still get your accountant to assist you but in short you:

* Declare as the director that you are issuing new shares. This ought to be a minuted director's meeting.
* Create a share certificate
* Update the company register
* Notify companies house within 30 days using form SH01 and also provide a statement of capital.

https://www.rapidformations.co.uk/bl...mited-company/

I would certainly not complicate things by messing around with different share classes either; issue ordinary shares, the same class as the existing ones.

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

+1

This is known as 'value shifting'.

For example. If the company was worth £10k and you issued an extra 100 shares, your share of the company's value becomes £5k. You would be seen to have made a disposal and would pay CGT accordingly.

There are other ways you can be caught. For example if they each had 100 ordinary shares in the company and then changed 100 of the 200 relating to shareholder 1 to say, 'A' shares with less rights, clearly value has shifted and so the person who transfers value is deemed to make a disposal at market value.

It sounds like it could go either way. I'll definitely talk to the accountant and see what his views on it are and which method he thinks would be best. I didn't intend on playing around with the share classes it was just going to be ordinary shares which hopefully will make things just the slightest bit easier!

We haven't begun trading yet so I'm assuming there shouldn't be much (if any) value to the company?

Thanks all for your help again!