Share buy back / retained earnings

[foliedouce]

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]

How do you want the company to pay for them?

[foliedouce]

trickywoo said:

How do you want the company to pay for them?

Cash

[2 GKC]

Don’t think so, will likely need to transfer from retained earnings to a capital reserve account

[foliedouce]

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]

Is there any difference if the shares are cancelled compared to if they are held in treasury?

Are the shares paid up?

[foliedouce]

Shares are fully paid up, I’m just thinking of cashing some of them in.

[plasticpig]

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]

Personal Tax difference depending on whether the shares are bought back or redeemed (plus stamp duty difference). Take tax advice!