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Where Taxpayers and Advisers Meet

Help! I am about to invest in shares in a company I work for..

RobertWood1
Posts:2
Joined:Sat Nov 18, 2017 3:18 pm
Help! I am about to invest in shares in a company I work for..

Postby RobertWood1 » Sat Nov 18, 2017 4:01 pm

Hello all,

Any help on the below would be most gratefully received
. Here is the skinny:

I am Managing Director of an established e-commerce company.

I have negotiated a deal to buy shares from an external shareholder (i.e not the founder/s) but have no idea about the tax implications of such a deal!

I earn decent money from the company already (just short of 6 figures) and am buying a 15% stake for just short of 6 figures again.

I don't currently own any equity - hence the need to buy the shareholding from someone else (i.e. I am not being gifted any equity currently).

The plan would be to potentially make money back when/if we exit in the next few years.

Does anyone know what I need to consider here? Someone mentioned 15% is the tipping point for some PAYE implications but it's lost on me. There's talk of being gifted 2% by the company next year so that would take me to 17% but is that any different when it comes to tax?

Do I pay tax on buying back the shares? Do I pay if I ever sell them? Does it affect my tax return (which I don't do myself currently as I'm below the 100k threshold)?

Bearing in mind, despite being the MD I am a bit weak when it comes to tax matters!

Thanks a lot in advance for any suggestions or expertise.

Lambs
Posts:1611
Joined:Wed Aug 06, 2008 3:15 pm

Re: Help! I am about to invest in shares in a company I work for..

Postby Lambs » Sat Nov 18, 2017 4:40 pm

Dear R,

You will likely get plenty of assistance from the members of this forum. However, the best advice will be to get specific, tailored advice from a suitably qualified professional. The amounts involved, and the level of detail of your particular circumstances require, are beyond what any forum can realistically offer. You may get good pointers, but you are, I think, unlikely to get "the complete answer". It pains me to say this, in some respects, because of how long I spend on this forum. And if anyone wants to prove me wrong, then have at it.

My own bit of advice here, is that you need to be mindful of the fact that you are buying shares from someone else, rather than directly from the company. This means that several attractive tax maneouvres (perfectly legitimate and endorsed by the legislation) may not be open to you. I am warning you to be careful that any suggestions you receive do NOT rely on your having SUBSCRIBED for the shares, because if you buy them from another shareholder, then they cannot have been subscribed for by you. It's a very easy thing for someone to miss, when they are not being advised.

Kind regards,

Lambs

RobertWood1
Posts:2
Joined:Sat Nov 18, 2017 3:18 pm

Re: Help! I am about to invest in shares in a company I work for..

Postby RobertWood1 » Sat Nov 18, 2017 6:04 pm

Thanks Lambs - you're more than likely right that I'll have to seek specifically tailored advice but you've helped educate me already so thanks a lot.

If anyone can help paint the picture for me I'd appreciate it.

Cheers


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