Tax on sold shares 2.5 years after exit

[Ravanol]

Hi guys,

So I sold a business in October 2014 and the sale was in 70% cash, 30% shares in the acquiring company.

I paid 10% of the whole combined value of the cash and shares.

So, if the shares were worth say £500k, and are now worth £800k..:

When I sell the shares, will I pay 0% on the £500k because I have already paid the tax on that... and 10% ER on the additional £300k?

Or do I pay 18%/28% CGT on the £300k?

Or neither?

Many thanks

[Ravanol]

(the 10% was entrepreneurs relief..)

[bd6759]

What did your sell? Was it shares you held in a company?

[Ravanol]

Yes... I sold all £100 of the shares in my company for £14m

[bd6759]

Yes... I sold all £100 of the shares in my company for £14m

That means you exchnaged 100 shares for £9,800.000 cash and £4,200.000 in shares.

This is treated as a shares re-organsiation. Effectively your new shares inherit the fractional value of your old shares.

I'm a bit rusty on share pooling rules, but if I recall correctly...

Your original CGT would have been calculated on the cash you received - £9,800,000 less costs of shares £70 = Gain £9,799,930

Your base costs for the new shares is £30.

(Unless you made an election for that rule to disapply, in which case you will have paid CGT on £13,999,900 and your new shares will have a base cost of £4,200,000.)

The new shares might not qualify for ER. You will need to check.