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Increasing share capital

UK company with one shareholder has healthy retained profits and for commercial reasons wants to increase its share capital as current share capital is stated at £100. Is a stock dividend preferable to a cash dividend followed by reinvestment? If yes on what basis - is it just a case of it requiring less paperwork and cash movements are not required? What are the procedures for declaring a stock dividend - the same as a normal dividend?

Is there an obvious alternative method that would enable a corporation tax deduction for the company? 

Many thanks for any advice.

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07th Feb 2013 18:55

Wouldn't a simple bonus issue be the simplest.

To get a Corp tax deduction pay a bonus and reinvest but obviouly not tax efficient overall.

Or provide free shares.  Assuming it is a limited company and the shares are not readily convertable then will get a CT deduction but income tax will again be payable but no NI payable.

Why does he need to increase share capital though?

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