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Increasing share capital

Increasing share capital

UK company with one shareholder has healthy retained profits and for commercial reasons wants to increase its share capital as current share capital is stated at £100. Is a stock dividend preferable to a cash dividend followed by reinvestment? If yes on what basis - is it just a case of it requiring less paperwork and cash movements are not required? What are the procedures for declaring a stock dividend - the same as a normal dividend?

Is there an obvious alternative method that would enable a corporation tax deduction for the company? 

Many thanks for any advice.


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07th Feb 2013 18:55

Wouldn't a simple bonus issue be the simplest.

To get a Corp tax deduction pay a bonus and reinvest but obviouly not tax efficient overall.

Or provide free shares.  Assuming it is a limited company and the shares are not readily convertable then will get a CT deduction but income tax will again be payable but no NI payable.

Why does he need to increase share capital though?

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