I have a client who owns several limited companies, including a group holding company where he is the main shareholder. He is considering selling his shares in one of the limited companies to the group holding company. The company in question has not generated any profit, and the value of its assets has remained unchanged since incorporation. Could you please advise whether there would be any Capital Gains Tax implications for the client personally if he proceeds with this share transfer to the group holding company?
“Assuming that your client has control of the holding company, the transaction would take place at market value for tax purposes under s18 of TCGA 1992. However, so long as the market value of the shares now is the same as your client’s base cost for them then there would be no gain being made and therefore no Capital Gains Tax to pay.”
We have had a query from a client about getting a valuation from HMRC re issuing new EMI share options. I have copied the extract below.
We are now at the point in the year where we’d like to allocate additional options to employees, and have had advice from elsewhere to say that we would likely now not be able to obtain a ‘par’ valuation from HMRC due to tightened restrictions (rather than an actual change in the rules) and that we should be asking for maximum 70% of the share price from our last funding round (which closed in May 2024).
Do you have any comments on the point about obtaining a par valuation or advice we should give to the client.
Where there have been recent transactions in shares, HMRC will take that valuation into account and as this will usually be above par value, HMRC will be reluctant to agree par value for EMI. Of course the terms of the fund raising would also be taken into account, for example preferential rights on shares etc. Maybe HMRC would accept slightly higher than 70% but it depends on the facts. Presumably the EMI options will be for a very small percentage of the share capital so a significant minority discount would be appropriate.
We have a self-employed client who last tax year made losses of £25,974 and this year made a profit of £37,554. Offsetting one against the other gives taxable profits this year of £11,580. Do we have to utilise all their loss brought forward, or can we limit the loss used to £24,984 so the client makes full use of their personal allowance this tax year and carries the remaining £990 to future years?
A loss carried forward under s83 ITA 2007 must be relieved against the first profits of the same trade until such as point as there is no more loss remaining. As such it is an ‘all or nothing; claim, so its not possible to only relieve enough of the loss b/f to take advantage of the personal allowance.
The method of giving relief for losses in this way is set out in s84 ITA 2007 and in HMRC’s manual at BIM85060.
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