CGT and Stamp duty on Sale of Ltd Company Shares

CGT and Stamp duty on Sale of Ltd Company Shares

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I have one question in rgard to CGT

One person registered a company with nominal share value of £100.00 He than gave loan to his company and company bought a property for the value of £1M. The aim was to develop the property and resale in future.

Company receive offer from a buyer about property of £1.3M. The buyer said that since property is on company name, he will buy the company, this why buyer avoid paying stamp duty. 

My question is what will be CGT implication to sellter. He has to pay CGT on £1.3 M or 300K.

Replies (9)

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By Ruddles
16th Feb 2024 11:24

What happened to the £1m loan? I suspect that the transaction will not be nearly as straightforward as you (and your client) think it will be.

BTW - what does "gave loan" mean??

Also - I'm being pedantic, but I doubt that Stamp Duty will be avoided here.

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By Truthsayer
16th Feb 2024 11:25

If he is being offered £1.3m for the shares, it sounds like he should jump at the chance! Has the buyer thought about the fact that they are buying a company with a £1m liability on its books? Buying the shares does not extinguish that loan. The seller will be taxed on £1.3m if that is what he is receiving.

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Replying to Truthsayer:
By Ruddles
16th Feb 2024 11:26

I assume there is a "not" missing from your post?

EDIT - you found it :¬)

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By nrw2
16th Feb 2024 11:28

There are likely two components to this £1.3m transaction:

1) £1m loan repayment by the company, or the purchase of the £1m loan by the buyer. Neither will give rise to stamp duty.

2) £0.3m sale of company shares, the gain (ie less the £100 base cost) on which the seller will pay CGT at his marginal rate and the purchaser will pay stamp duty reserve tax at 0.5%

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Replying to nrw2:
By Ruddles
16th Feb 2024 11:56

I would say that SD is more likely than SDRT.

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By David Ex
16th Feb 2024 11:39

Your previous post was asking a question on behalf of someone else.

If you’re not an accountant, you shouldn’t be giving anyone tax advice and certainly not based on what you glean from an anonymous internet forum.

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Replying to David Ex:
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By FactChecker
16th Feb 2024 14:35

All very true; and bothering to engage with people who have responded is a concept apparently alien to OP (so one-way traffic before the wind starts howling down the empty streets).

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By Bobbo
16th Feb 2024 11:45

Is OP's username "no need" short for 'no need to pay for an accountant to advise on this seven figure transaction' ?

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Replying to Bobbo:
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By Leywood
16th Feb 2024 11:51

My thoughts exactly except I thought to ''no need to pay for an accountant to advise''

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