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Tax Implications of Investment in Trading Company

Plan for new investor to pay existing shareholders £250k in order to invest in their company

Company has two shareholders, each owning 50 x £1 shares. Potential investor is willing to take 25 newly issued shares and give the two existing shareholders another £249,975, which they will then lend to the company. Net assets of the company are currently about £200. As the current shareholders shareholdings will drop from 50% each to 40% each, will there be a deemed disposal, and therefore a taxable capital gain for each of the existing shareholders?

If the new investor paid £250k for his 25 new shares instead, the excess going into the share premium account, and a few years down the line, they reduced the capital and took it back out again (in the ratio of the shareholdings), how would this be taxed?

Thanks in advance for any help.

 

 

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24th Apr 2018 21:07

chatman wrote:

Company has two shareholders, each owning 50 x £1 shares. Potential investor is willing to take 25 newly issued shares and give the two existing shareholders another £249,975, which they will then lend to the company. Net assets of the company are currently about £200. As the current shareholders shareholdings will drop from 50% each to 40% each, will there be a deemed disposal, and therefore a taxable capital gain for each of the existing shareholders?

 

Value shifting?

chatman wrote:

If the new investor paid £250k for his 25 new shares instead, the excess going into the share premium account, and a few years down the line, they reduced the capital and took it back out again (in the ratio of the shareholdings), how would this be taxed?

CGT?

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