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taxadvisor.uk, Chartered Certified Accountant
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I own shares in a private company, if the company is acquired

Resolved Question:

I own shares in a private company, if the company is acquired by a public company for shares do I incur a capital gains tax if I retain the shares in the public company
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

You would have sold your shares in the private company for a consideration in the form of shares in the new company.

This event would be deemed a chargeable event for capital gains purposes and the gain would be chargeable to CGT.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert:  taxadvisor.uk replied 2 years ago.

Andrew, I would like to add additional information ..

The exception to above rule would be if certain stock exchange conditions are met on a take-over.. these would become clear when you receive information on the take-over.

If the new company is offering shares only, you don't pay capital gains tax when you receive the shares. These are treated as it they were bought at the same time and cost as your original shares.

More information on company take-overs is covered here

http://www.hmrc.gov.uk/cgt/shares/co-takeover.htm

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.
Thank you for your response, I am a little confused, assuming the public company offers all shareholders shares or shares and I only take up shares in the plc in exchange for my shares and do not sell them does this incur CGT?
Expert:  taxadvisor.uk replied 2 years ago.
Andrew, thank you for your reply.

If the PLC offers shares only for your shares in the private company, and you decide to take them and hold on to these shares, then you are effectively deferring your capital gain to such time when you eventually sell them.

Your original cost becomes your cost of new shares.

I hope this is helpful.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4802
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and 2 other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.
Expert:  taxadvisor.uk replied 2 years ago.
Andrew, your reward of a generous bonus is greatly appreciated.

Best wishes.

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