Capital gains on part disposal

[Maslins]

The problem is, you're not actually losing anything.

Eg, year 1 the company has 100 out of 100 shares and makes £100k profit. You own the entirety of that £100k profit.

Year 2, the company buys back 10 shares for however much. You now own 90 out of 90 shares, and the company still makes £100k profit.

Even if you had 1 share, but it was the only share, that 1 share would be worth exactly the same as the 100 previously were. No value has been created or deleted.

That's why you either need to dispose of the company completely (in which case you now own nothing), or have several shareholders, with 1 selling their share to the company meaning their actual ownership has reduced in value. Note (as always) there are anti avoidance rules here, so you can't have a husband-wife company and simply sell some of husband's shares one year, and some of wife's the next.

[shaft1]

thanks for the replies.
i'm going to talk to my accountant next week. let's see what he has to say about this.

[ASB]

Afraid not. In short, you can only get CGT treatment if your ownership of the company is significantly reduced.

In your plan, although you are selling shares, you are not changing your % ownership (ie you own 100% of shares before, but also 100% of shares after).

If there not any viable way of making a capital distribution other than wind up? Surely given the cash is surplus to requirements for working capital there must be some way of getting it out (though I never found one!)

[Maslins]

Afraid not. In short, you can only get CGT treatment if your ownership of the company is significantly reduced.

In your plan, although you are selling shares, you are not changing your % ownership (ie you own 100% of shares before, but also 100% of shares after).

[sweetandsour]

Hi all,

Someone please tell me what's wrong with this idea...

I have a Ltd company which has, lets say, 100k sitting in it's bank account. I own the company 100%. Can i not sell (somehow, not sure exactly how) 10% of the shares back to the company for 10k and use my capital gains allowance on this to not pay any tax? Or is "sell the share back to the company" not possible.

I have a feeling that this is not a good idea (or perhaps even a daft idea ) otherwise someone would have already posted it here but i thought i'll ask anyway.

I am not an accountant but I think you might have some difficulty determining the market value of the 10% of your company, it won't be as simple as £10,000 and would really be much higher.

I hope it is not that simple as you think it might be otherwise I will be having serious words with my accountant for missing this.

[shaft1]

Hi all,

Someone please tell me what's wrong with this idea...

I have a Ltd company which has, lets say, 100k sitting in it's bank account. I own the company 100%. Can i not sell (somehow, not sure exactly how) 10% of the shares back to the company for 10k and use my capital gains allowance on this to not pay any tax? Or is "sell the share back to the company" not possible.

I have a feeling that this is not a good idea (or perhaps even a daft idea ) otherwise someone would have already posted it here but i thought i'll ask anyway.