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Does £25k limit on s1030A capital distribution include shares?

Client has £30k ordinary share capital and has already disposed of all assets and distributed most of the retained profits. He is therefore left with £30k cash and £30k share capital. When the company is dissolved does the repayment of share capital still count as a capital distribution under a1030A as it exceeds the £25k limit?

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No

Repaying the share capital isn't a distribution.

However, as a matter of company law, you can't just repay share capital willy nilly.

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Yes when the company is dissolved and the cash distributed to the shareholder none of it will be treated as an income distribution for tax purposes in any event.

But be careful that the dividend payments that have already occurred could not be shown to have been made in anticipation of the dissolution.

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02nd Jun 2014 14:04

"But be careful that the

"But be careful that the dividend payments that have already occurred could not be shown to have been made in anticipation of the dissolution."

I act for a company that is going to go be voluntary wound up to release the cash as capital. They directors are intending to make a distribution before winding up so as to utilise the shareholders basic rate bands. is this going to be a problem?

 

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If the effect of making the distribution is that the reserves remaining on dissolution are under £25,000 then yes they may well have a problem if they want the distribution on winding up to be capital for tax purposes but do not wish to appoint a liquidator.

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