Is it possible in a husband and wife Ltd company for the Wife who owns 40% to have all of her shares bought back by the company?
Is there an issue in that she will still be connected to the company afterwards via her husband (they are not getting divorced)?
Replies (10)
Please login or register to join the discussion.
The buyback can happen if you are happy that capital treatment will not apply. As you suggest, she is still connected post the buyback.
a, Yes
b, no issue in the same way if she had not already owned the shares. If she is a director or employee but apart from that no real issue
c, you do not ask but how much is she being paid, is it nominal value or fair market value. that could be a tax issue
In company law terms, the company can buy back her shares, but in tax law it is a distribution to the extent that it is not a return of capital.
Before the POOS, she has an interest in 100% of the share capital, taking into account her husband's holding. After the POOS, she'd still have an interest in 100% of the smaller share capital, all via her husband. So you don't get near qualifying for capital treatment.
You would waste your and HMRC's time with a clearance application (but at least the reply should be quick).