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TonyTax
TonyTax, Tax Consultant
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UK LTD COMPANY SET UP - For setting up a Ltd Co, how many

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UK LTD COMPANY SET UP - For setting up a Ltd Co, how many shares should I allocate? 100 or 10? What is the correct way of doing this please?
Submitted: 7 months ago.
Category: Tax
Expert:  TonyTax replied 7 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 7 months ago.

There is no right or wrong way.

However, if you issue 100 shares to yourself and you later want to transfer some to a spouse, for example, so that dividends are distributed tax efficiently, it is easier to do that with 100 shares than it is with 10 as the dividend is diluted more by 100 shares than it is with 10. If you only issued 10, you could always issue more in the future if you need to.

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

Customer: replied 7 months ago.

Thank you, ***** ***** I set up 100 at £1 per share, is that ok? I read somewhere that you have to pay for the shares but is that only if the company is wound up? So if I set it at 100 shares at £1 per share this will always be this sum?

Expert:  TonyTax replied 7 months ago.

You pay for the shares up front. There are some useful notes here and here.

Expert:  TonyTax replied 7 months ago.

The £1 per share denomination is meaningless as time goes on. If somebody bought into your company in thee years, for example, by which time the business had value, you would expect them to pay more than £1 for their shares.

Customer: replied 7 months ago.

Thank you, ***** ***** the value per share, should I make it £1 per share so I pay £100? I notice some people have set up as 10 shares at 0.1 and paid £1. What is the best way forward please.

Expert:  TonyTax replied 7 months ago.

On a set up, you would normally pay £100 for 100 £1 shares.

Customer: replied 7 months ago.

Are you saying that it is usual to allocate £1 per share?

Expert:  TonyTax replied 7 months ago.

If you issued £5 shares, you would pay £5 per share. You wouldn't denominate them as £5 shares if you only paid £1. As I said the denomination is pretty meaningless. The lower the denomination, the less expensive it is to buy the shares initially.

Customer: replied 7 months ago.

So what I am asking is what price should I set per share? If you are saying it is meaningless and doesn't affect anything later, would it be better to set it at 10p per share?

I am asking for your professional advice and guidance as an accountant, otherwise if I have to research this myself, I can easily do that on the internet. Please can you provide a more definitive answer as to what I should do.

Thank you.

Expert:  TonyTax replied 7 months ago.

You can set any price you like. I've seen 1p shares issued. You can certainly issue the shares as 10p shares. So, if you issued 100 10p shares you would pay £10. If it was me, I'd issue 100 £1 shares and pay £100. That is what the vast majority of people setting up companies do.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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