The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
When one company acquires control of another company, this is called a takeover. This guidance note considers the capital gains tax (CGT) implications for shareholders of the company being taken over.
The consideration paid by a purchasing company to the shareholder(s) for their shares in a target company could be either:
wholly in cash
new securities in the vendor in exchange for shares in the target company (a ‘share-for-share exchange’), or
a mixture of cash plus new securities
A chargeable gain or allowable loss will arise if all or part of the consideration given to the vendor on a takeover involves cash.
If the old shares are exchanged for cash, this is a disposal of all of the original shares and a gain or loss will arise. This is calculated in the normal way using the share matching rules. For guidance on calculating the gain on share disposals, see the Shares guidance note.
If the old shares are exchanged for a mixture of new securities plus cash, this is a part disposal for CGT. A gain or loss will arise on the cash element, but not on the securities element (as long as the share-for-share rules are not disapplied, see below). Wherever a part disposal arises, the allowable cost that can be deducted from the cash proceeds is calculated by using the formula:
See Example 1.
If a capital loss arises on the cash element, it should be considered whether the disposal meets the conditions to set the loss against the shareholder's income. This is discussed in the Losses on shares set against income guidance note.
As well as cash and shares, in some
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The substantial shareholding exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. Conversely, if losses are generated by the disposal and the SSE conditions are
Summary of capital allowances on carsThe current capital allowance rates applicable to cars are as follows:Pool typeDescription of carRateLegislationMain rate poolNew and unused cars with CO2 emissions over 50g/km but not more than 110g/km (to be reduced to 50g/km and below from April 2021)18%CAA
Normal due dateSmall companies (including marginal relief companies) are required to pay all of their corporation tax ― nine months and one day ― after the end of the chargeable accounting period.For example, where a chargeable accounting period ends on 31 December 2018, the due and payable date for
Business asset disposal relief (previously known as entrepreneurs’ relief) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. For disposals made on or after 11 March 2020, the relief is available on up to
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.