purchase of own shares

purchase of own shares

Didn't find your answer?

does any one know where you enter on SATR the net profit on company buying back individual's shares taxable as a distribution?

Replies (12)

Please login or register to join the discussion.

avatar
By mdcallen
05th Oct 2014 21:36

capital or dividend

That depends on whether it is taxed as income (a dividend on page 3) or capital (a capital gain on the capital gains pages).

Thanks (0)
By johngroganjga
06th Oct 2014 08:43

Agree with the above, but as you say that in this case it's taxable as a distribution the question of putting it on the CGT pages presumably does not arise.

Thanks (0)
avatar
By nick farrow
06th Oct 2014 09:41

thanks gentleman

but I already know it is taxable as distribution but I assume it needs to go somewhere on the additional information pages on ptp software

Thanks (0)
avatar
By chicken farmer
06th Oct 2014 14:43

By the way ...

It is the excess of sale proceeds over nominal value that is taxed, this is not necessarily the same as the 'net profit' as you put it.

As far as the return goes its just  dividend. But also remember there has been a CGT disposal of the shares so maybe there is an allowable loss to claim?

Thanks (1)
avatar
By nick farrow
07th Oct 2014 16:25

thanks chicken farmer very interesting

Thanks (0)
avatar
By nick farrow
08th Oct 2014 12:23

original subscription price

I think chicken farmer meant excess of sales proceeds over original subscription price not nominal value

Thanks (0)
avatar
By chicken farmer
10th Oct 2014 08:36

Yes, sorry

I was thinking in terms of shares being subscribed for at par

Thanks (1)
avatar
By User deleted
10th Oct 2014 09:23

Loss?

If there is a taxable distribution, being excess of proceeds over amount subscribed, how can there be a capital loss?

Thanks (1)
avatar
By chicken farmer
10th Oct 2014 09:42

Because...

There is still a disposal of the shares and the amount which is treated as a distribution is deducted from the sales proceeds in arriving at the gain or loss (s. 37 TCGA) which could bring the net proceeds down to equal the nominal value. If the individual purchased the shares (rather than subscribing for them) at a price in excess of nominal value, he has realised a capital loss.

Thanks (1)
Portia profile image
By Portia Nina Levin
10th Oct 2014 10:04

Balderdash!

If I buy a £1 share for £5 (by subscription) and sell it for £10, I have a £5 distribution.

I then calculate my capital gain (or loss) I take the £10, and deduct the £5, leaving £5 proceeds.

I deduct my £5 base cost from my £5 proceeds and I have a capital gain (or loss) of absolutely [***] all.

Throw me any set of numbers and that will be the result, where there is a distribution element.

There is of course a tax credit, which needs to be added to both the £5 and the £10, and so is eliminated for CGT purposes.

There might be a gain or loss if the shares were acquired otherwise than by subscription, because you would still look at the amount originally subscribed for the shares, rather than the amount that the disposor of the shares paid for them.

Thanks (0)
avatar
By User deleted
10th Oct 2014 10:06

Ah yes, I see

The references above to subscription price led me to think that we were talking about shares acquired on subscription. There are of course other ways of acquiring shares :)

Thanks (0)
avatar
By chicken farmer
10th Oct 2014 12:59

Portia has such a way with words!

But if she had purchased a £1 share for £5 and sold it back to the company for £10, she would have a £4 allowable loss.

Thanks (0)