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