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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Due to divorce, I am selling my shares in the family

Resolved Question:

Hi
Due to divorce, I am selling my shares in the family business which I was given a number of years ago, for £200k, which I intend to use to buy a new home for myself and children. Can you advise what my position relation to CGT might be?
Many thanks
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.

Hi.

Let me take a look at this and I'll get back to you in a bit.

Expert:  TonyTax replied 11 months ago.

Take a look under the heading "Disposal of shares or securities of your personal company" in HS275 here.

If you meet the criteria for entrepreneurs' relief set out there, then any gain you make in excess of the annual CGT exemption of £11,000 will be taxed at 10%. If you don't meet the criteria, then your gain will be taxed at 10% or 20% or a combination of the two rates depending on the level of your income in the tax year you sell the shares.

The cost of your shares for CGT purposes should be their value when they were given to you but I would advise you to consult the company's advisers or your own acountant/tax adviser to be sure of the "cost" figure as well as your eligibility for entrepreneurs' relief.

That cost figure will be deducted from the disposal proceeds of £200,000 to arrive at the gain.

I hope this helps but let me know if you have any further questions.

Customer: replied 11 months ago.
Thank you for your answer.Unfortunately I am not eligible for entrepreneurs relief. As the shares were given to me for free, can I still claim the value of the shares at that time as an eligible cost? Also, as I am re-investing the profits into property, can I claim relief for this?Thanks
Expert:  TonyTax replied 11 months ago.

As I'm not privy to the circumstances which led to your being given the share for free, I cannot definitively say that the cost will be what they were worth at the time they were given to you but that will almost certainly be the case. As I said in my previous post, you ought to discusl this with your company's advisers.

You cannot claim relief for investing in a house you intend to live in yourself I'm afraid.

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