I have a client whos is looking to retire in a years time and I'm putting some figures together for him. He purchased his 500 £1 ordinary shares from another director over 5 years ago for £10,000 and is now looking to sell for £50,000.
I'm looking at CPOS as the other director cannot afford to buy his shares. I reckon that if he doesn't get this for whatever reason and the CPOS is treated as a distribution, his income tax position would be £50,000 less share issue price £500, distribution £49,500 and his CGT position would be proceeds £500 less £10,000 base cost, loss £9,500 not available to be offset.
If we did get CPOS as a capital payment, is the position £50,000 less £10,000 base cost, £40,000 gain less ER(if applicable)?
Many thanks
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Yes except you have missed the annual CGT exemption (£11,100 in 2016/17) and ER is not a deduction in arriving at the taxable gain. It just affects the rate at which you tax it.