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.
- Bookkeeping Rate of Pay 2,660 38
- How to claim relief under a Double Taxation Agreement 284 6
- Tax implication on superannuation 177 3
- What's the Barmiest Reason A Client gave you for going? 2,550 25
- GRNI - Normal Balance 65 2
- Entrepreneurs Relief, and then new company 207 3
- Portuguese Resident having a UK Limited Company 219 8
- Tax Fines - HMRC 811 13
- Taxi Drivers Cost of Sale 96 2
- Is Xero payroll as rubbish as I suspect it is? 1,296 24
- VAT - Check on clients business 907 37
- Second Limited Company 116 1
- Digital tax accounts - what do we expect? 492 10
- Private doctors - Ltd company vs partnership 290 8
- Probate services 367 7
- Annual to At Least Quarterly 493 20
- trading losses allowable? 758 14
- Post AAT? 689 3
- Small amount of untaxed royalties for someone outside SA 141 1
- Treatment of valuation fee for IHT. 194 2