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Stamp duty on share buy back

Stamp duty on share buy back


I have just had a company that has just bought the shares from a director. I have posted the surplus to Capital Redemption Reserve however where do I post the Stamp Duty on the transaction?

Steve Baker


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04th Jul 2007 11:51

Thank you


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03rd Jul 2007 16:58

Without ANY warranty as to whether this is right...
...I believe the entries should be:

Dr Share capital 49
Dr P&L reserves 69,951
Cr Cash 70,000

To record the cash payment out

Dr P&L reserves 49
Cr CRR 49

To set up the CRR

Bear in mind I am a tax person, not an auditor!

All the best.

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03rd Jul 2007 11:24

Double entry???
I must admit I am confused but I would be grateful if you would give me the double entry. The client has bought back 49 shares from a director at a price of £70,000. My double entry was

Cr Cash 70,000

Dr CRR 70,000

Dr Share Capital 49

Cr CRR 49

I must admit I was unsure if this was right and was waiting for the partner to review it but as they are away for a fortnight and the client is breathing down my neck for the accounts I would like this to be right on the drafts.
I would be grateful for any assistance in this matter

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By Anonymous
03rd Jul 2007 08:26

Check those entries again...
You posted the "surplus" to capital redemption reserve? My understanding was that it was the nominal value of the shares bought back that went to the CRR, with the rest of the transaction (including stamp duty) going straight to P&L reserves.

In longhand, I believe the entries are:

Dr Share capital - nominal value of shares bought back
Dr P&L reserves - surplus on buy-back plus stamp duty
Cr Cash - total paid out

Being share buy-back transactions

Dr P&L reserves - nominal value of shares bought back
Cr CRR - nominal value of shares bought back

Being creation of capital redemption reserve.

Incidentally, I assume this was a buy-back, rather than the redemption of redeemable shares. If the shares were redeemable, my understanding is that there is no stamp duty to pay.

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