Been looking through the legislation but havent been successful in finding an answer.
So say a business incorporates, business valued at 10, 000 all conditions have been met for IR.
Is there anything stopping someone taking £1 in share capital and 9, 999 in share premium?
Replies (12)
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Effectively, you have just said they will be taking £10,000 in shares.
If there was £10,000 share capital and £0 premium, the effect would still be £10,000 in shares.
Your suggestion could be done such that there are 100 1p shares, or 1 £1 share.
Equally, my alternative could be done as 1,000,000 1p shares, 10,000 £1 shares or 1 £10,000 share.
Eh?
You can take just one 0.00001p share if you want.
It will just be that that share will have a value of £10,000 and a base cost of whatever the base cost of the chargeable assets in the unincorporated business were.
Confusing tax and accounting here
Tax does not care as PNL (like the name) says the base cost is the same whatever you do
Accounting does not care either, it is what it is, a single £1 issued at a premium, but why you would want to tie up £10k into one share is beyond me.
You can look at Company law and see if there is something that stops subscriber shares being issued at a premium, but I honestly don't know off hand nor care particularly, as I have never seen it and would never recommend it.
Oh look
Somebody who does not know about TCGA 1992, section 29, and does not understand IHT.
Value shifting
Isn't it amazing how often this comes up on AWeb? If someone has found a way round this without troubling their PI insurers, they are much more clever than I.
That is how
Haha. Could the following apply. Is apply IR as normal. Then for the individual to give shares to another person. However, they will have to restrict the gain so they never make a gain above annual exempt amount. This way shares can be tfred at market value. In practice would take years if company is of any meaningful value as only have 11k annual exempt amount per year. Suppose could consider giving half to spouse so double the annual exempt allowance to play with.
That is how we have been doing it (with spouse also)
CGT is covered
IHT is irrelevant unless death within 7 years
We had to get advance clearance from HMRC - they even told us we had overvalued the shares at the time!