Tax position on Share Distribution
A Client of mine has a number of shareholders, one of which owned 200 shares (out of 1040 issued) and was no longer involved in the business. After nearly 10 years they managed to buy these shares back for £8000, which was paid by the Company.
They want to give these shares to the sole Director who currently owns 20 shares.
The share's have a nominal value of £1.00 each.
My understanding is that this gift of shares would be the equivalent of a cash payment of "net" £8000 and PAYE and NI would be payable on a grossed up figure.
Does anyone have a solution that doesn't involve this expensive route? We did look at cancelling and then reissuing new shares but again, my understanding is that there would be PAYE/NI liable on the difference between purchase and real value so no benifit there.
Thanks in advance
- paid or unpaid - who knows! 548 11
- Limited Company Contractor renting a house whilst working at a temporary location 183 5
- thinking of starting up - AAT ACCA 266 6
- IR 35 deemed payment calc 151 2
- Capital Gain? 520 14
- Sell business after leaving country 156 2
- How much to charge? 282 5
- CIMA MIP - wife joining business, non MIP 194 1
- Client with enquiry inro careless or negligent tax return 647 15
- Income tax on foreign dividends 249 2
- break even point 601 18
- Simple consolidation question 145 2
- Client charged VAT by US supplier 397 10
- Abandoning accountancy membership in order to operate as a sole trader 1,010 27
- How does the tax payer dis-apply/disclaim from use of their personal allowance? 409 9
- Client cash balances, on or off-balance sheet for full service brokerage firm 213 3
- Abolish the penalty regime 308 5
- Separating a business into retail and wholesale, with husband and wife as separate owner/managers. 203 4
- IHT Query 264 4
- Old Books for a 'NON' Client 449 2
- Possible Partnership? 470
- Tax and accounting treatment on long lease granted from freehold 445
- Lunatics in charge of the asylum - Bluestone 432
- Purchase of property freehold - capitalisation of costs 237
- Growing Limited Company concerned about assets if something goes wrong 232
- New Fangled Penalties 226
- Clubs and Taxable Income 223
- Subsistence and hotel expenses 219
- Deferring taxable income until after 5 April 197
- Loans to other companies 171