Lump sum from company - capital gains or income tax?

MrsMcnab_2

Hello,

I'm a director of a small, start-up company that's about to be bought out! It's very exciting, as we'll all get our shares paid out and we've been earning and absolute pittance over the past 3 years since starting the business, so, as you can imagine, I've started making plans for my cash! I'm only a (very small) minority shareholder, so it's not going to be a crazy amount of money but, obvioulsy, exactly how much it'll be rather depends on how much I'll be taxed and, since I've never had any kind of cash lump before, I'm clueless!

So, it'd be great if someone could tell me, will my cash be subject to capital gains tax or income tax or some other tax entirely? I'd really love to be able to calculate how much I'll have left once I've paid off my debts to see how far away from a deposit I am!

Thanks very much for any help.

ceeforcat

Capital Gains tax only on the increased value of your shareholding.

Just a thought, though, - if you are bought out after April, the tax will not be due until 31/01/11. Before that it will be a whole year earlier. Remember, it will be the date of the contract, not when you receive the money!

MrsMcnab_2

Oh, that's good - I was worried it'd be subject to income tax!

We're about a week away from exchange (as it were!) and completion will be by mid-feb at the latest, and the money will be transferred the same day, allegedly, so will definitely have to pay the tax straight away - although that's no terrible thing, as I'd probably spend it anyway!

Thanks v much for your reply, now I can get back to my maths-making!

ceeforcat

The tax will not be payable until 31st January 2010.

MrsMcnab_2

Oh yes, I see. Gosh, I'm dim. Looks like those fixed rate savings accounts might come in handy after all then!

Thanks again.