Hi,
I have a holding company which holds investments (shares).(these are only investments NOT subsidiaries or associates)
The director (don't ask me why) wants to transfer the investments out of company's name into his own name.
My understanding is follows:
1.Company would have deemed to disposed of shares at market value.
2.The gain will be market value of shares less original cost, and corporation tax at 20% (small company) will be charged
3.Any historic revaluation will be reversed through the revaluation reserve.
4.The individual (director) will pay 0.5% stamp duty on the market value of the shares
My question is, is will the individual have to fork out the cash to pay for the market value of the shares?
Or can he just not pay for them?
If any one can help me or point me to some legislation that would be great!
Many thanks!
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Replies (5)
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Share transfer
I would submit not. The flip-side is that a one- off S455 assessment will arise and, of course, the annual P11D benefit
Note re gain
Note that the gain the company makes will be reduced by indexation, it will not be MV less cost but MV less cost less indexation.
S455?
I am not sure I see how S455 is in point unless the shares are sold for a consideration and that consideration remains unpaid. Even if there is a deemed disposal at market value that does not result in there being a deemed loan to the transferee, still less an actual one.
Undervalue
To the extent that the director does not pay full market value he will be deemed to receive taxable remuneration or be subject to tax as a dividend. The stamp duty charged will be based on any actual consideration paid - not market value.
Only assets?
If the shares are the only assets of the company, will the company go through a liquidation and dissolution?