CGT Implications of Issuing Shares
I have a client company which is very profitable (profits approx. £1m pa) - it has three shareholders all owning 30 ordinary shares each.
They want to invite another shareholder into the business who has a similar / complementary business which is currently loss making but which they feel has huge potential. This person would also become a director and receive a small salary & dividend etc.
They would like to issue 10 new ordinary shares to the new shareholder in consideration of him transferring his trade into their existing business.
Are there any capital gains tax implications for the existing shareholders because under the new structure they will own 30% of the shares each as opposed to 33.3% etc. i.e. do the S29 value shifting provisions apply and also are there any tax (benefit in kind) issues for the incoming shareholder? I don't think there are any CGT implications for the existing shareholders as it is a fresh issue of shares nor do I think that there are any tax issues for the incoming shareholder as he is not receiving shares by virtue of his employment etc. but any expert advice would be very welcome.
As ever, my apologies if my understanding is basic but I do not have a huge amount of experience in these matters.
- Capital allowances or revenue is capital? 84 1
- any implications of this type of transaction 50 1
- How much did you pay for your website 1,685 28
- Sage 50 cost centre limitations 97 3
- What font do you prefer to use for correspondence? 285 11
- Straightforward email correspondence or PDF letter attached to blank email? 1,031 13
- How to post Sales figures in Sage50 Accounts (we use separate Sales ledger) 262 7
- Sage data 104 1
- Course costs for retraining as a barrister 422 9
- Limited company buying a car 362 6
- Funding Circle experience 155 3
- Excel query 120 2
- Do I need to pay my accountant 1,293 13
- Payment on account penalties 129 3
- Tax on free shares 145 5
- Flat Rate Vat 14.5% and 5% reduced rate VAT 208 3
- Capital allowances on sale and puchase of business assets 127 1
- Audit 492 14
- PPR relief and half hectare rule 129 3
- Buying a horse?? 431 12
- CTA study material 805
- Anyone have clients that use Pay4Later to offer customers credit? 496
- Raiders of the Lost Tax File 461
- Employment related securities question 323
- AIM Stocks and IHT 311
- Expat pension contributions? 282
- Tax Relief for overseas employees 281
- Trust for Employee 257
- Service Charge Accountant Career Options 233
- IPP (International Pension Plan) income 161