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Will the income now be
£60-70K? or still only £30-35K?
If the former there is a potential CGT liability but probably with entrepeneurial relief.
By gift to the other shareholder
I would be thinking about exemption from employment related securities on the family and friends heading perhaps. It is slightly unusual to give away valuable shares to an otherwise unconnected person. I would think about whether the shares are business assets for CGT/IHT, hard without any knowledge of the company. You might want to set out these in a letter to your client.
Company could alternatively exercise a buy-back for a nominal consideration - but difficult to see what value there would be here.
Check the articles, shareholder agreement etc.
It is insane that a transaction like this could become so complicated but, in this day and age and with the OTT tax penalty regime you should do some detailed guidance to cover yourself.
Virtual tax support for accountants:www.rossmartin.co.uk
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Sometimes we got caught up in the detail and as a result get nothing done. Its quite ridiculous.
There are no assets and I would not pay him anything for his shares so they are worthless. Nobody is going to argue otherwise.
Transfer them to the other director and tell him to enjoy retirement.