成人影音

View the related Tax Guidance about Purchase of own shares

Purchase of own shares 鈥� overview

Purchase of own shares 鈥� overviewThis guidance note discusses the purchase by a company of its own shares (often referred to as a 鈥榮hare buyback鈥� or a 鈥榩urchase of own shares鈥�). This may be considered for a variety of reasons, such as a tax efficient exit route from the company or a simple restructure of share capital. However, there are a number of issues, both legal and tax, that need to be considered before such a transaction is carried out.The repurchased shares can either be immediately cancelled, which is typically the case, or they may in some circumstances be retained by the company (effectively 鈥榠n treasury鈥�). If the shares are retained, companies can sell them for cash (to raise funds or under an option scheme) or transfer them for the purposes of employee share schemes. These shares, referred to as 鈥榯reasury shares鈥�, are dealt with in further detail in the Treasury shares following a share buy back guidance note.The tax treatment for the shareholders in a company on a purchase of own shares will fall into one of two categories 鈥� either the 鈥榠ncome treatment鈥� or the 鈥榗apital treatment鈥�. Under the income treatment, the purchase is dealt with as an income distribution (ie a dividend). However, there is an exception for buybacks made by unquoted trading companies where, provided certain conditions are met, the seller is instead treated as making a capital disposal. See the Income treatment for purchase of own shares and Capital treatment for purchase of own

Succession planning鈥� overview

Succession planning鈥� overviewThe planning for passing on a family company or business to future generations should be done well in advance of the current owners taking retirement or dying. There will be issues around who the business should be passed on to, for example, the owners鈥� children , employees of the company or a sale to a third party. It will also have to be decided whether the owners want to continue receiving income from the business and whether they wish to still have some involvement through maintaining share ownership. There are also tax considerations to bear in mind especially involving CGT and IHT. This guidance note summarises some of the succession options and links to further technical commentary. The succession options reviewed here are as follows:鈥�transferring the assets on death to the children of the owners鈥�transferring business assets by way of a gift during the lifetime of the owners鈥�purchase of own shares by the company鈥�buy-out by family members or management鈥�passing the business over into an employee ownership trust (EOT)鈥�keeping the company as a family investment company (FIC)鈥�sale to a third party Transferring business assets on deathThe owners of a family company may want to keep their shares until they die and then pass them onto their children at death. For tax purposes this can have advantages as unquoted shareholdings meeting the qualifying conditions in a trading company will qualify for 100% business property relief (BPR) reducing the value transferred for IHT

Treasury shares following a share buy back

Treasury shares following a share buy backThis guidance note sets out the tax effect of a company retaining in treasury shares which it has bought back. For an overview of the purchase of own shares see the Purchase of own shares 鈥� overview guidance note.See also Simon鈥檚 Taxes D.605.Tax treatment of treasury sharesAny limited company is permitted to retain repurchased shares. Such shares are known as 鈥榯reasury shares鈥�. It is unusual for the typical UK private company to have treasury shares because their use is limited. One example might be that the company expects, as at the time of

Statutory clearances

Statutory clearancesAvailable statutory clearancesA number of clearance procedures are provided for in the legislation. Only some of these are dealt with regularly by tax advisers and so it is only these most common clearance procedures that are covered in more detail below. A full list of the statutory provisions where advance clearance can be applied for can be found on the GOV.UK website.Clearances under the following provisions should be sent in a single application to HMRC鈥檚 Clearance and Counteraction Team. Market sensitive clearance applications should be marked for the attention of the 鈥楾eam Leader鈥�.Please click on the links where indicated for further guidance on drafting the relevant clearances:CTA 2010, s 1091DemergersSee the Demerger clearances guidance noteCTA 2010, s 1044Purchase of own sharesSee the Purchase of own shares clearances and reporting guidance noteITA 2007, s 247(1)(f)EIS shares 鈥� acquisition by new companySee the Enterprise investment scheme deferral relief and Gain deferred through EIS becomes chargeable guidance notesCTA 2010, s 748 / ITA 2007, s 701Transactions in securitiesSee the Transactions in securities clearances guidance noteTCGA 1992, s 138(1)Share

Purchase of own shares clearances and reporting

Purchase of own shares clearances and reportingThis guidance note sets out the clearance procedure and reporting requirements associated with the capital treatment of a share buyback. See the Purchase of own shares 鈥� overview guidance note for an overview of this area and the Capital treatment for purchase of own shares guidance note for details of the conditions for 鈥榗apital treatment鈥� for a relevant shareholder on the purchase of own shares by a company.In situations where capital treatment applies to the repurchase of a company鈥檚 own shares, it is possible to obtain advance clearance from HMRC. The same clearance procedure may also be used for a repayment or redemption of shares. Regardless of whether advance clearance is sought, taxpayers seeking to treat amounts received from selling shares back to the company as capital must report details to HMRC within 60 days of the share buyback. Clearance applicationsAn application for clearance must:鈥�be in

Company reorganisations 鈥� overview

Company reorganisations 鈥� overviewThis guidance note summarises some of the ways in which companies may reorganise their activities and some of the key tax considerations.A company may want to reorganise its activities or its share structure for a number of different reasons. The most common are to prepare for a sale (as often a buyer will want a new 鈥榗lean鈥� company to hold the trade) or to return capital to investors. However, it may also be to merge difference business together or to split an existing business into two or more parts. Without specific reliefs these sorts of reorganisations would create capital gains charges, either at the shareholder or corporate level (or both). A number of reliefs are available which can, either singly in or in combination, allow such reorganisation to take place without a tax charge.In addition to the reorganisations discussed below, a company may also undergo a demerger process. In simple terms, a demerger involves the separation of a company鈥檚 business into two or more parts, typically carried on by successor companies under the same ownership as the original company. For more details of demergers, see the Demergers - overview guidance note.Share for share exchangeA share for share exchange occurs when shares in one company are sold in exchange for new shares in the purchasing company. This type of transaction may also be called a 鈥榩aper for paper鈥� transaction, as the consideration may also be loan notes as well as (or instead of) the issue of new

Income treatment for purchase of own shares

Income treatment for purchase of own sharesThis guidance note sets out the tax effect of the 鈥榠ncome treatment鈥� for a relevant shareholder on the purchase of own shares by a company. See the Purchase of own shares 鈥� overview guidance note for an overview of this area.The tax treatment for the shareholders in a company on a purchase of own shares will fall into one of two categories 鈥� either the 鈥榠ncome treatment鈥� or the 鈥榗apital treatment鈥�.For shareholders who are UK resident individuals, the income treatment will apply by default to the repurchase. However, where the buyback is carried out by an unquoted trading company and specific conditions are met, the seller is treated as receiving a capital payment instead (ie the capital treatment applies). See the Capital treatment for purchase of own shares guidance note for further details on when the capital treatment can apply.For shareholders who are not UK resident individuals, only the income treatment can apply as one of the conditions that must be satisfied under the capital treatment is for the shareholder to be UK resident.For a corporate shareholder, it is likely that the distribution will fall within one of the dividend exemptions, and as a result the entire amount received on the buyback is brought into tax as a chargeable gain (ie the capital treatment applies to most corporate shareholders).

IHT planning for your client鈥檚 business 鈥� overview

IHT planning for your client鈥檚 business 鈥� overviewThis guidance note gives an overview of the 鈥業HT planning for your client鈥檚 business鈥� sub-topic. How do changes to the business structure affect qualification for BPR? Where should the business premises held to maximise BPR? What is the best way to ensure that BPR is preserved in respect of lifetime succession planning and death planning? What are some practical tips that can be used to ensure that BPR is captured where possible?In this sub-topic, for ease of reference, 鈥榯rading鈥� is used to mean a business that does not consist wholly or mainly of making or holding investments and 鈥榠nvestment鈥� to mean a business that does consist wholly or mainly of making or holding investments though these are not terms used in the legislation and are generally best avoided in any technical analysis other than as shorthand.Practical tips for securing BPR

Legal and professional fees

Legal and professional feesStatutory references to ITTOIA 2005 relate to unincorporated businesses and CTA 2009 relate to companies unless otherwise stated.Legal and other professional fees can represent substantial costs to a business. A detailed analysis is often required for the purpose of preparing tax computations as this category of expenditure represents a significant risk for disallowed items.As a general rule, legal and professional fees are usually disallowed due to relating to:鈥�items of a capital nature (this is the most likely category), or鈥�not being wholly and exclusively incurred for the purpose of the tradeThe difficulty comes in applying these general rules to particular items of expenditure. Even where an item of expenditure is found to be revenue rather than capital in nature, it still needs to be shown that it also meets the wholly and exclusively test. The general concepts are discussed in the Wholly and exclusively and Capital vs revenue expenditure guidance notes. The legislation does not provide further detail on which fees are disallowable, and for this reason a substantial body of case law has developed regarding the tax treatment applied by the courts in respect of particular expenses. Where legal and professional fees are incurred in connection with another disallowable expense, they will most likely be disallowed too. Likewise, where legal and professional fees have been incurred in connection with expenditure that is specifically allowed, it is likely to be an allowable deduction. For further types of legal and professional fees, see Simon鈥檚 Taxes B2.449.Practical

Reconstructions

ReconstructionsSometimes a reorganisation will be more complex than a simple share for share exchange. The 鈥榩aper for paper鈥� rules relating to share for share exchanges (discussed in the Share for share exchange guidance note) are therefore extended to deal with reconstructions. What constitutes a scheme of reconstruction is discussed in detail below.Relief is available to shareholders where there is a reconstruction involving the issue of shares and then also either a scheme of arrangement with the members or the transfer of a business. These are considered in more detail below.More complicated reconstructions are also used when a demerger process is being undertaken. These are discussed in the demergers series of guidance notes, see the Demergers 鈥� overview guidance note as a starting point.Scheme of reconstructionBoth reconstructions involving a scheme of arrangement (TCGA 1992, s 136) and reconstructions involving the transfer of a business (TCGA 1992, s 139) require us to look at TCGA 1992, Sch 5AA for the definition of a 鈥榮cheme of reconstruction鈥�.This says:鈥�the scheme involves the issue of ordinary share capital by the successor company to the holders of ordinary shares (or any one class of share) of another company and does not involve the issue of share capital to anyone else鈥�all holders of shares or any class of shares have the same entitlement to shares in the successor, and either:鈼�substantially, the whole of the business(es) carried on by the original company is (are) carried on by the successor, or鈼�the scheme is carried