I LOOF AFTER A LIMITED COMPANY WITH TWO SHAREHOLDERS. ONE SHAREHOLDER IS RETIRNG FROM THE BUSINESS AND BEING PAID £40,000 BY THE OTHER SHARE HOLDER.IS THIS JUST A PERSONAL CAPITAL GAIN FOR HIS SELF ASSESSMENT RETURN OR DOES ANY ENTRIES NEED TO BE MADE IN THE BUSINESS ACCOUNTS APART FRO A SHARE TRANSFER.
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Yes it's a capital gain.
No entries required in the company's accounts - not even the share transfer.
Well ...
It might be a CAPITAL gain (is that why you used CAPITALS throughout your question - or do you think we're all hard of hearing?)
On the other hand, it might be a capital loss.
But you might have an income tax charge for the recipient of the shares and you might have a CT deduction for the company (I suspect unlikely for either, but make sure that you've dotted and crossed ...)
No accounting entry in the books but you need:
1. Get a stock transfer form signed by the retiring shareholder
2. Update the register of members and update the public register when you file the next annual return
3. Send the transfer form with 0.5% stamp duty payable to HMRC for stamping.