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Where Taxpayers and Advisers Meet

Gain on shares sale

Herbs16
Posts: 69
Joined: Wed Aug 06, 2008 3:53 pm

Gain on shares sale

Postby Herbs16 » Fri Aug 17, 2018 9:38 am

Can someone help please

My friend has a company, husband and wife 50/50 set up they are separating and the company is buying back the shares from the wife, she earns £100k, will she pay 28% cgt on the gain or can she claim entrepreneurs relief and pay 10%, she will not trade again.
Thanks

AGoodman
Posts: 881
Joined: Fri May 16, 2014 3:47 pm

Re: Gain on shares sale

Postby AGoodman » Fri Aug 17, 2018 12:10 pm

Nothing you've said suggests that she couldn't claim entrepreneurs relief provided the company is trading and uses all its assets for trading purposes.

The big issue is whether it qualifies for CG treatment at all rather than income tax. The default position is income tax and there are some fairly detailed conditions to get into CG.

This article is a useful summary:

https://www.taxadvisermagazine.com/article/purchase-own-shares

Particular issues somebody will need to consider are whether W is still connected to H and therefore the company after the transaction despite separation (I think not if separated), whether she has held the shares for 5 years , and whether it is for the benefit of the trade (I suspect a sale on divorce may well qualify as benefitting the company but HMRC have issued guidance).

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Gain on shares sale

Postby bd6759 » Sat Aug 18, 2018 12:14 pm

For ER to apply, on the day if the disposal wife needs to be an office bearer of the company (and have been so for the preceding 12 months).


With regard to the purchase, it is always best to get clearance from HMRC before the transaction.


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