Transfer of shares within company?

[bosshog]

Hi,

I'm looking to set up a company with a couple of people. However without going into reasons I will initially only have a small percent of the shares. However we want to change this over time as its linked to a revenue stream.
How do you transfer shares to one partner to another - and more specifically what are the costs involved in this?

thanks for any pointers

[flyingjase]

I would suggest engaging an accountant for detailed advice as there are significant tax implications involved in what you have described.

I have recently set up another company where I'm incentivising a member of staff in a very similar way (ie increased equity based on increased revenue) and had to set up an EMI scheme. This is basically a share option scheme recognised by HMRC and will ensure that you can reduce your tax liability on the shares at disposal to 10%

Anyway - very high level ramble, but hope it points you in the right direction

Jason

[wattsm666]

As an accountant I strongly recomend you seek proper advice. There is some nasty legislation that catches shares acquired by virtue of employment, which can effectivly seek to tax the value of acquired shares as though it is a benefit in kind (if they haven't been acquired at open market value).

The EMI route sounds like the best option, however, there are a number of criteria that have to be adhered to and not every type of Company can implement such a scheme.

[bosshog]

Yes I shall be seeking the advice of an accountant, but I'm just trying to get a basic idea at the moment if possible.

So essentially if there is a Limited company with 2 share holders, one holder with say 80% of the shares.
If a transfer of shares is made to say 70% to 30% between the 2 share holders - are their tax's to be paid?

thanks again.

[wattsm666]

There are two, possibly three types of tax you need to consider here. Capital Gains Tax for the shareholders that passes the shares across, stamp duty if they are not gifted and tax by virtue of your employment on the shares received. Since they all interact with each other it is difficult to give advice. In all likelyhood there will be some form of tax to pay. An EMI might avoid this.

[davidd]

It also depends on what the company is worth, 80% of a company with no value is worth ......
So if you are trading at a loss or with very little profit you can easily move shares about with little in the way of a tax implication.

I would however always check with an accountant....(I'm sure one will be along in a moment).

D