Tel: 01736 795753
This email address is being protected from spambots. You need JavaScript enabled to view it.

Buy-back of company shares

Source: HM Revenue & Customs | | 27/03/2018

When a company makes a purchase of its own shares, any excess paid over the amount of capital originally subscribed for the shares is usually treated as a distribution. However, there are special provisions that enable an unquoted trading company or an unquoted holding company of a trading group to undertake a purchase of its own shares without making a distribution.

In order to do this a clearance application may be made. Under this procedure a company wishing to make a purchase of its own shares can obtain advance confirmation from HMRC that the distribution arising will be an exempt distribution. HMRC’s helpsheet includes some useful flow diagrams to help companies establish whether the payment will qualify as an exempt distribution or not.

Planning note

If the application is approved, the payment is treated as consideration for the disposal of the shares in the hands of the seller and subject to CGT. Where entrepreneurs' relief is available, CGT of 10% is payable in place of the standard rate. There are a number of qualifying conditions that must be met in order to qualify for the relief. Where the necessary conditions are met, a company purchase of own shares can be a tax efficient way of exiting a business.

If you would like to consider your options in more detail please call for further advice.



Search Archive


Latest News

Keep abreast of Brexit news
19/03/2019 - More...
As the Brexit date fast approaches, it seems the only thing we can say with any certainty is that

Present tax-free company benefits
19/03/2019 - More...
The list of company benefits that can be provided tax-free to employees is quite short. However,

Changes to VAT IT systems if no-deal Brexit
19/03/2019 - More...
In a letter being sent to businesses across the country, HMRC has published the following

Search

Our Address

Greenwood Wilson
The Old School
The Stennack
St Ives
Cornwall
TR26 1QU

Contact Us

tel: 01736 795753
fax: 01736 798642
This email address is being protected from spambots. You need JavaScript enabled to view it.

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login