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bigduckontax, Accountant
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I have been discussing becoming a director and shareholder

Customer Question

I have been discussing becoming a director and shareholder of limited company, what would be the initial tax implications for both me and the current directors
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

A Director of a limited company is an employee per se and must be remunerated through PAYE channels. Pretty simple, the company will raise a P46, HMRC will issue a tax code and tax and NI will be deducted as appropriate. Just check that the tax code issued is correct.

As a shareholder the only other tax liability would be Income Tax (IT) on dividends over 5K in any one tax year and a latent liability to Capital Gains Tax (CGT) on any gain above your Annual Exempt Amount (AEA), currently 11.1K, made on ultimate sale of your shareholding.

I do hope that you have found my reply of assistance.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3360
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 10 months ago.

Thank you for your support.

Customer: replied 10 months ago.
Thanks for getting back to me in this
I want to be clear on one thing, the way this business is currently set up is with 2 shareholders, one with 75% and the other 25%. If the they relocate this with me being 40% and 60% between the original 2 is their anything else I need to be aware of from a tax/hmrc perspective
Customer: replied 10 months ago.
Meant to say reallocate
Expert:  bigduckontax replied 10 months ago.

No, just a possible CGT wobble if the proportions are changed after you have invested when you come to sell eventually and make a gain over the AEA. However, the tax is not onerous as you would almost certainly be entitled to Entrepreneurs Relief which limits CGT to a 10% flat rate instead of the usual 18% or 28% or a combination of the two rates depending on your income including the gain in the year of disposal. Confused, you will be!

Delighted to have been of assistance.

Customer: replied 10 months ago.
Thanks for that, the shares have limited value (£1) and I'm presuming as its a private limited company I won't be able to sell for a profit, I presume
Expert:  bigduckontax replied 10 months ago.

Well I wouldn't say that. There is a thriving market in second hand companies; you can even sell them on eBay! I am aware of a company which cost its owners two quid in shares which sold as a shell for 500 quid.

Expert:  bigduckontax replied 10 months ago.

Thank you for your bonus.

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