Limited Company Dealing Shares

Hello,
Maybe somebody knows the answer to this? I have a limited company which holds a sharedealing account. Does anybody know what the CGT allowance in the UK is? I know that for private investors it is £8,800 this year. Anybody know what it is for Ltd companies?

I also have one other query. I have some shares that have increased recently. I am planning to hold them long term. However, as the tax year will soon be over, is it a good idea for me to sell my shares, realise the profit and then buy back my holding again? This would mean that my profits would be tax free this year. Sounds like a stupid question but my accountant is not answering my emails!

Thanks!

Find a new accountant

Jan said:

Hello,
Maybe somebody knows the answer to this? I have a limited company which holds a sharedealing account. Does anybody know what the CGT allowance in the UK is? I know that for private investors it is £8,800 this year. Anybody know what it is for Ltd companies?

I also have one other query. I have some shares that have increased recently. I am planning to hold them long term. However, as the tax year will soon be over, is it a good idea for me to sell my shares, realise the profit and then buy back my holding again? This would mean that my profits would be tax free this year. Sounds like a stupid question but my accountant is not answering my emails!

Thanks!

Click to expand...

Jan

First of all sack your accountant ! If they cannot respond to you with important questions on taxation they are not worth using. There are plenty of accountants around.

Individuals and companies are treated differently. CGT calculations are complex - believe me I have had to do them with paper and calculator.

Here are a couple of snippets from the web (search for companies CGT), but I really advise you to talk to an accountant. Take a look at the taper relief tables if you don't believe me !

Charlton
Company capital gains

The whole of the chargeable gains after indexation relief (less allowable losses) is included in the profits chargeable to corporation tax. The rate of corporation tax applicable will be either the full rate, the starting rate or the small companies rate (with marginal relief as appropriate).

Capital gains by companies

A company's capital gains are subject to CT at the normal rates with no annual exemption.

• Companies continue to receive indexation relief on gains and do not receive taper relief.
• Capital gains may be offset by capital losses of the same accounting period or capital losses brought forward from previous periods.
• Roll-over relief is available where business assets are replaced.
• Qualifying disposals of substantial holdings (at least 10%) are exempt. The vendor and the company being sold must satisfy a trading condition and the vendor must have owned the shares for at least 12 months.
• Companies are subject to different identification rules from individuals for disposals of shares and securities.

Jan said:

I also have one other query. I have some shares that have increased recently. I am planning to hold them long term. However, as the tax year will soon be over, is it a good idea for me to sell my shares, realise the profit and then buy back my holding again? This would mean that my profits would be tax free this year. Sounds like a stupid question but my accountant is not answering my emails!

Thanks!

Click to expand...

Charlton's covered your other query well, so I won't go there but I agree with his comment about changing your accountant.

I notice your details say you're in Dublin, so are you talking about UK tax or Republic tax? Can't help you if it's the latter as it may be different, but in the UK what you're talking about is called 'bed and breakfasting'. If you sell the shares in one tax year and buy them back less than 30 days later in the next tax year, then the disposal is treated as never having happened for CGT purposes - ie they specifically want to stop people doing what you're talking about. See here for more details:

http://www.hmrc.gov.uk/budget2006/bn27.pdf

As I say, if you're under RoI tax rules then you'd need to check as likely to be different to UK.

Dublin ..... look up Freaneys ...

Jan,

A few points, and these are only half-guesses so I stand to be corrected.

Isn’t Ireland a separate county from the UK and therefore not subject to UK tax laws?

I suspect the shares held by your company will not be treated as a bona fide investment unless trading in shares is a function, or forms part of the function, of the business. And unless the business is authorised, recognised or exempt, there may be difficulties in persuading the tax man otherwise.

Grant.

Thanks for all the answers here. I have only recently moved to Ireland so am still under UK rules. I gather here that company shares are 100% taxed and presumably at the company tax rate, i.e 19%. As for my personal shares, I gather that unless I dispose of my holding for more than 30 days, I am deemed not to have disposed of them at all? But if the 2 transactions are within the same tax year and less than 30 days apart, am I still deemed never to have sold in the first place? From that document , I understand that I cannot do this. They have you by the b*lls every time!

Thanks again! The accountant has told me that I should wait until the end of January as theyre too busy. I only have to use him for another 3 months anyway.