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Sam, Accountant
Category: Tax
Satisfied Customers: 14351
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I hold shares in my company. They are 0.01p shares that I

Customer Question

I hold shares in my company. They are 0.01p shares that I paid £10 per share for. They 0.01p shares are fully paid up, but the share premium is not. I have held these shares for 2 years. If I decide to sell these shares, which are now valued at £40 per share, what tax would I have to pay? PAYE or Capital Gains
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer. You would pay capital gains tax but there may be relief in the form of Entrepreneurs releif (allowing the charge to be just 10%) if you meet all the conditions which are - You’ll qualify if you dispose of any of the following:all or part of your business as a sole trader or business partner - including the business’s assets after it closedshares or securities in a company where you have at least 5% of shares and voting rights (known as a ‘personal company’)shares you got through an Enterprise Management Incentive (EMI) scheme after 5 April 2013assets you lent to your business or personal companyI have added a link here for your information that covers this whole topic fully Let me know if I can be of any further assistance Thanks Sam
Customer: replied 2 years ago.
Thanks Sam, but I have been told that if I sell the shares back to my company then I have to pay paye on the profits. So I am confused as to which is the right answer
Expert:  Sam replied 2 years ago.
Hi That would be correct if this was a employee profit scheme and you were awarded these through your employment (which you did not indicate so I assumed you were a director in your own limited company - ) Please advise further Thanks Sam
Customer: replied 2 years ago.
I think this is trickier. It is not an employee share scheme. But was originally set up as to entice employees to stay in the company long term. I have been told my someone that I need to hold them for five years before they become a capital gain. Is this correct?
Expert:  Sam replied 2 years ago.
Hi Thanks for your response You will need to ask the employer - as they will be able to advsie whether this was an approved or unapproved scheme - and what options were granted with these shares at the time of acquisition, and also what the market value of the share was when you purcahse them at £10 per share ( as from what you advise this would indicate you paid more for them then they were worth)