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
- Why should I retain membership? 2,656 46
- Recharge for private use of a company car 164 3
- Are there Special Rules for Agencies? 319 5
- Funding Circle Servicing Fee 118 2
- SA online - 4 hour limit 1,249 12
- Alerting clients versus walking away from clients 382 5
- Surprise visit from HMRC! 2,451 18
- Vat 239 4
- CT/CIS offset 109 2
- Statutory accounts, current company address, or one that was correct at EOY? 159 4
- Trade name 161 3
- Musician - Allowable Travel expenses 127 1
- New business - journal entries 306 20
- B2B vat in the EU 102 2
- Stamp duty on multiple property transaction 307 18
- VAT on deposits 202 2
- VAT clearance for determining the correct rate to apply 124 1
- Annual tax investigation cover fee? 399 12
- option to tax 202 1
- Share of profits from building society 97 1
- Auto enrolment excuses 776
- Feedback on accounts production software for IFRS 705
- Add T&Cs to Sales Order in Sage 383
- Social investment tax relief 203
- Digita Hosted Software 197
- Call Centre Data Costs 190
- Buying goods in US and selling them to company in US 154
- Travel costs and contractors 149
- Problems with Sage 50 Payroll v21(2015) 142
- Certificates of tax deposit 134