What tax relief applies in a share transaction? When do you need a company reorganisation or reconstruction? What tax reliefs apply to a company reorganisation, a share for share exchange, reconstruction or other transaction involving shares?

You can reorganise or separate company activities and different subsidiaries using a variety of different methods.

The super-practical tax guides in this index provide an outline of the tax treatment together with step by step guides, case studies and tax clearance templates.

Instructions

1. Using the 'Transactions Planner, decide what you want to do and what Option works best.

2. Follow the links to the Tools to find the tools for the job.

3. Check out our Case studies to find your topic.

Transactions Planner

Reorganisation Planner

What do you want to do?

 Aim     Options    Tools
         

Creating a group

  • Inserting a new holding company
  • Creating new subsidiaries

Why?

  • To separate new or different activities
  • To create a holding company for a share scheme or investment relief
  • Asset protection
  • To create a spare company for later SSE relief
 

 

 

Add a new subsidiary:

  • Incorporation of a new subsidiary by an existing company

Form a group

  • Insert a new holding company via a share for share exchange
 

Guides

Case study & tax clearance template

Paperwork

 

         

Reorganise share capital:

  • To create different share classes
  • To change share rights

Why?

  • For new investment
  • For employee reward & incentive
 

With shareholder approval: amend by Companies Act 2006 resolution:

  • Bonus & rights issues
  • Sub-division
  • Alteration of rights
 

Guides

         

Repay share capital:

  • Return share capital to shareholders, or
  • Create a credit to the profit and loss reserve

Why?

  • Shed excess cash
  • Create distributable reserves
 
  • Capital reduction

 

 

Guides

         

Prepare for immediate sale:

  • Move saleable activity to a new clean company
  • Separate the activities of a company into two companies

Why?

  • The potential sale of one trade or activity
  • Separation/fallout of business partners.
 

Share sale following:

  • Liquidation demerger
  • Capital reduction demerger

Asset sale/company sale

  • Move (hive) up, across or down!
  • Transfer of business or assets around a group
  • Plan for SSE
 

Guides

Case studies & tax clearance templates

 

         

Tidy up the business or assets or plan for a potential future sale 

  • Split activities to separate out two trades

Tidy up or plan for a potential future sale:

  • Demerge a trading subsidiary
  • Demerge an investment subsidiary
  • Streamline a group

Why?

  • Potential sale of trade or investment business or investment asset
  • To preserve Capital Gains Tax (CGT) Business Asset Disposal Relief (BADR) or Inheritance Tax (IHT) Business Property Relief (BPR).
 

Just trades:

  • Statutory demerger
  • Capital reduction demerger
  • Liquidation demerger

Trades or business:

  • Liquidation demerger
  • Capital reduction demerger
  • Hive down to a clean new company
 

Guides:

Case studies: just trades

Case studies: a mixed business

         

Tidy up the business or assets or plan for a potential future sale 

  • Alternatives to a demerger
 
  • Distribution: de-envelope assets by transfer to shareholders
  • Asset sale to a new company or shareholder
 

Guides

         

Buyout 

  • By Employee Owned Trust
  • By management
  • By a third party

how?

  • Borrow against assets of new subsidiary
  • Share for share exchange for existing shareholders
 
  • Sale to Employee Ownership Trust
  • Share buyout via a new holding company
  • Share buyout via a LLP
  • Share buyout: by individuals
  • Purchase of own shares 
  • Trade sale: disposal of goodwill & trade followed by liquidation
 

Guides

Case study

Paperwork

 

         

Exit planning for key shareholders, leaving remaining shareholders in control

For?

  • Buyout retiring or dissenting shareholder 

 

 

 

Use company funds to buy shares

  • Company purchase of own shares

Borrow against company assets to buy shares

  • Buyout via a holding company
 

Guides

Case studies

         
 

Expand the businesses

  • Merge two or more businesses
     

Guides

 

         
 

Stamp Duty: Share for Share exchange

   
  • Relief for a share for share exchange
  • What are disqualifying events?
  • Examples of cases where relief does and does not apply.
 

Guides

Stamp Duty: Share for Share exchanges

         
Close down the company: that is the end!  
  • Liquidation
  • Striking off
 

Guides

Checklists

 

 

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