shareholders funds

T

Taxuser33

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Hi all, is there anyway i can take funds out as capital and be subject to capital gain rather than as an income source and be subject to income tax rules? can i re-invest possibly in shares or some other investment vehicle or would revenue see this as avoidance. i have a large exposure to tax regardless after building up the limited company personally. any advice would help in advance of heading to my tax advisor.
 
If your company has redeemable ordinary shares, then subject to the memo & articles (& Company Law), it should be able to purchase some back from you.
 
My mistake. I note comment re shareholders funds. Disbursment of capital is subject to income tax and not CGT. Assuming that you have not put funds in by way of shareholders loan then any other funds disbursed to you from the company would normally be subject to income tax. part or full sale of the company is an option and would be subject to CGT. As per earlier post retirement relief may be an option but you would need to retire from the business. Ideally you should obtain specific advise from a good accountant.
 
thanks for replies

not of retirement age so that's not an option. company wil be retained after this, we're not looking to wind up the company, just to get cash in a tax efficient manner. directors loan would be subject to income tax for the company, wouldn't it?

brendan, i'm not sure you're accurate with your assessment of "retirement relief" - there is no obligation to retire from a business completely from what I know, maybe this can be backed up?

buy back of shares seems an option. is this the most tax efficient and also the best way of getting cash out personally?
 
if you are trying to get money of the company by selling shares (or having them redeemed) then the transaction will be treated as being subject to income tax unless you substantially reduce your total shareholding in the company.

You are right that you don't have to retire to claim retirement relief, but unless you are reducing your shareholding, it would be an income tax transaction, not capital gains tax, anyway.
 
Taxuser33 said:
directors loan would be subject to income tax for the company, wouldn't it?
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If you originally lent money to the company and the directors loan accounts is still in credit you can repay yourself this money tax free on both sides.

You d need to check with your accountant the balance on the account.
 
thanks again,

ignoring the directors loan which isn't on the cards, in essence is there any way of converting income to capital in a tax efficient manner? reducing the shareholding in any substantive manner is not an option. the busines will continue as before, it's really just to see if there are options other than drawing down a dividend.
 
Any possibilty of using a holding company to extract cash efficiently? Talk to a tax consultant to see if this is an option.
 
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