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Mo Tax Expert
Mo Tax Expert, Accountant
Category: Tax
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We're a relatively startup and still pre-revenue, but

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We're a relatively young startup and still pre-revenue, but founders and some friends have put some money in the business for equity. One of the founders wants to leave now, and is happy to transfer most of his shares for nominal value. We would probably just distribute them between the other founders, but can't quite figure out the tax implications. We're not quite sure if HMRC would think that the shares are worth more than nominal value. Can anybody help with this?
JA: Have you talked to a tax professional about this?
Customer: No.
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: I guess the accountant would have their own questions, not sure what else is relevant.
Mo Tax Expert

Hi and welcome to JustAnswer. I’m Mo Barrie, Qualified Accountant and Tax Expert.

Thank you for your patience.

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Customer: replied 18 days ago.
Thank you for looking into this

Hi,

Thank you for your time.

You can transfer the shares to the other stakeholders.

Transfer of share with a considerable value of over £1000 would be subject to stamp duty of 0.50%.

Any gains realised from the transfer is subject to capital gains tax. However as the transfer is issue in the nominal value I suspect no gains would arise.

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Hi,

Hope the above information was helpful, and you now have the clarity that you need.

Thank you for the inquiry. It is my pleasure to assist.

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Customer: replied 18 days ago.
Thanks for you reply. Would we not risk that HMRC think our shares are worth more than nominal value and therefore tax us on them? I've read that even the person giving away the shares might be due CGT if HMRC thinks the shares have gone up in value and that we would need something called gift-hold-over relief to avoid that. But then again I've read that it is quite likely that HMRC would accept a nominal valuation for tax purposes if the company is pre-revenue, which would indicate that we don't need to worry.

Indeed if you are selling or transferring shares at a nominal value, usually no CGT or stamp duty would apply.

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