Making an investment in a small company

Making an investment in a small company

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First of all apologies, I am having a complete mind blank following a client meeting and would like some comments or tips.

Firstly, my client is a director and shareholder of a small Ltd company. They have an interest in another company and personally own a 50:50 share in that company (which is currently dormant). They asked what would be the implications if their company owned the share rather than them personally.

Am I correct in thinking:-

  • No effect on Corp Tax rate divisions, either way both would be associated companies for the director.
  • No effect on future dividends paid, ultimately tax will be due when the shareholder pays a dividend to themselves.

Secondly, in the future my client is considering making an investment in this other company. What is more advantageous a company making the investment or a director? I guess there is no difference? A Company would get no tax relief as it is an investment?

Again apologies for the basic question but I have totally confused myself.

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Mark Lee headshot 2023
By Mark Lee
26th Mar 2012 14:04

Double tax when company disposes of it's shareholding

Corpoaration tax on the chargaebale gain and then further tax to get the proceds out of the company.  Also company cannot claim ER relief when it disposes of the shareholding.

Mark

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