Share BuyBack - Dividends or Capital Gains Treatment

[churchie2856]

Mrs Churchie holds three shares in a private company. I transferred these to her in 2019, having held the share myself for 20 year.

Her shares are now being bought back by the company. Neither she nor I are a director or an employee of the company. Each share is worh £50K.

We want to understand, from her personal taxation point of view, would the payment be treated as a dividend or a capital gain?

If it depends, then under which circumstance is it one or the other?

Appreciate if any PH tax accountants can clarify.

[Panamax]

Note the words "share" and "buy". Therefore CGT regime.

[Eric Mc]

Might be eligible for Business Asset Disposal Relief too. She should get proper tax advice.

[ziontrain]

As a general principle, where a company makes a purchase of its own shares, any excess paid over the amount of capital originally subscribed for the shares is a distribution.

[Panamax]

ziontrain said:

As a general principle, where a company makes a purchase of its own shares, any excess paid over the amount of capital originally subscribed for the shares is a distribution.[/url]

Yes, as it's a private company that may well be relevant.

I suggest OP seeks specific paid advice.

[churchie2856]

ziontrain said:

As a general principle, where a company makes a purchase of its own shares, any excess paid over the amount of capital originally subscribed for the shares is a distribution.

Thanks. I too had found the same.