Share buy back / retained earnings
Share buy back / retained earnings
Author
Discussion

foliedouce

Original Poster:

3,095 posts

261 months

Monday 9th November 2020
quotequote all
If I want to sell some of my shares (privately owned company) back to the business, is it possible to do this without reducing the retained earnings?

Just after some high level information before any discussions with the FD

Thanks

trickywoo

14,226 posts

260 months

Monday 9th November 2020
quotequote all
How do you want the company to pay for them?

foliedouce

Original Poster:

3,095 posts

261 months

Monday 9th November 2020
quotequote all
trickywoo said:
How do you want the company to pay for them?
Cash

2 GKC

2,315 posts

135 months

Monday 9th November 2020
quotequote all
Don’t think so, will likely need to transfer from retained earnings to a capital reserve account

foliedouce

Original Poster:

3,095 posts

261 months

Monday 9th November 2020
quotequote all
2 GKC said:
Don’t think so, will likely need to transfer from retained earnings to a capital reserve account
That’s what I thought, but wanted to double check before the FD chat

anonymous-user

84 months

Monday 9th November 2020
quotequote all
Is there any difference if the shares are cancelled compared to if they are held in treasury?

Are the shares paid up?

foliedouce

Original Poster:

3,095 posts

261 months

Monday 9th November 2020
quotequote all
Shares are fully paid up, I’m just thinking of cashing some of them in.

plasticpig

12,932 posts

255 months

Tuesday 10th November 2020
quotequote all
You might want to check the tax implications of doing that. Unless it's changed in the last 10 years if you are a director and it's a close company the sale of shares back to the company is treated as income and not as a capital gain. So yo will need to declare it as dividend income on on your tax return and it will be taxed accordingly.




db10

291 posts

293 months

Tuesday 10th November 2020
quotequote all
Personal Tax difference depending on whether the shares are bought back or redeemed (plus stamp duty difference). Take tax advice!