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SHARE CAPITAL REDUCTION WITH DIFFERENT CLASSES OF SHARES

Posted: Tue Sep 18, 2018 5:50 pm
by skc
Father owns 100 A ordinary £1 shares and 50 B ordinary £1shares.
Son owns 50 B ordinary £1shares.
A and B shares have the same rights.
There is no share premium account and the company value is approx £500k.
The company wants to reduce its share capital by redeeming the A shares at par ie £100. Father and son both happy with this.
After the reduction father and son would own 50 B ordinary £1shares each.
The effect is that father owned 75% of the issued shares before the capital reduction and will own 50% after.
If there a tax consequence for the son as in effect the value of his B shares have just increased significantly?

Re: SHARE CAPITAL REDUCTION WITH DIFFERENT CLASSES OF SHARES

Posted: Thu Sep 20, 2018 10:17 am
by SteLacca
Only on disposal for capital gains tax purposes, since his gain will be that much higher.

Re: SHARE CAPITAL REDUCTION WITH DIFFERENT CLASSES OF SHARES

Posted: Fri Sep 21, 2018 9:31 am
by skc
Thank you
I forgot to mention that this isn't a trading company.
Is there any tax consequence for father havibg only received par for the share capital reduction when the value would be greater?