How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6309
Type Your Tax Question Here...
bigduckontax is online now

I am a British citizen resident in England. Within the next

This answer was rated:

I am a British citizen resident in England. Within the next fortnight I expect to receive ca. $1.3 million as my share of the proceeds of the takeover of an unquoted US company of which I own shares.
My question relates to tax liability on both sides of the pond. In this connection, should I ask for the money to be paid directly into my UK current account (thus converted at once into sterling), or should I open some type of bank account in America?

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

The gain on these shares will be subject to UK Capital Gains Tax (CGT) less your non cumulative Annual Exempt Amount (AEA) of 11.3K. This will be taxed at 18% or 28% or a combination of the teo rates depending on your income including the gain in the tax year of disposal. If this is a business venture and you are going out of the business altogether you may be entitled to Entrepreneurs' Relief which limits CGT to a flat rate 10%. As you are resident in the UK you have no US tax liability, but a with-holding tax may be imposed which, under the Double Taxation Treaty between the UK and the States, is allowable as a tax credit against your UK bill.

Where you have the funds paid is irrelevant.

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

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 12 months ago.
Thank you, that's helpful so far, but one follow-up question:
will the "gain on these shares" be taken as the full amount that I receive, less the few thousand pounds that I paid for them when I set up the company (together with three others)? I ask this because the company is unquoted, so it has not possible to value the shares, until the moment when the takeover price was agreed very recently. On your other point, yes I am going out of business altogether. I look forward to hearing from you once more. Regards HM-P
Customer: replied 12 months ago.
Can you please confirm that you received my follow-up question?

The gain to be taxed is what you receive net less the amount you paid for them less your AEA. As you are going out of the business Entrepreneurs' Relief will be available do your rate of CGT will be a flat 10%. The value of an unquoted share is what a third party is prepared to pay for it, no more and no less.

Sorry for the delay, I have been out shopping; even we experts have to live, you know!

Thank you for your support.

Customer: replied 12 months ago.

Thank you again very much, those are just the answers I was hoping for. So, good-bye (finished). Kind regards, ***** ***** By the way, apologies for asking for confirmation that you received my follow-up question - I asked that only because on my screen, the JustAnswers page didn't make it clear whether my follow-up question had in fact got sent off.

No problem, all sorted.