Share Windfall and Reinvesting to avoid CGT

LutonDave_2

Hi all,

I've trawled through the posts on here but not found an answer to this question so hoped someone may be able to help please?

I've just been lucky enough to have a recent (Sep 2011) windfall of around 40k from share options being realised. I think I may be liable for around 8k of CGT on this but not sure when it will have to be paid.

The issue is that I'm considering starting a business with the money and one option I have is a franchise (which quite neatly would cost around 40k). If I made this investment within a particular timescale (?) could I off-set this investment against the windfall so that I wouldn't have to pay the tax since it is all happening within the same tax year and I possibly won't be earning for the first 12 months of the new business?

I appreciate any help some nice (and knowledgable) people could offer me please since I am going to need the extra cash to support me through a first unpaid year.

Thanks in advance,

Dave

00ec25

there is no relief for investing the proceeds from the sale of a personal asset (the shares) as capital for a new business

Rollover relief for sale of shares
http://www.hmrc.gov.uk/cgt/shares/reliefs.htm

Your shares are not an asset which was already used in the (new) business so you cannot qualify for business asset rollover relief for a personal company (that's if you have structured the new business as a personal company anyway?)
http://www.hmrc.gov.uk/helpsheets/hs290.pdf

nor would it qualify for Entrepreneurs Relief
http://www.hmrc.gov.uk/helpsheets/hs275.pdf

Re tax payment

the gain arose in tax year April 2011 - April 2012. You therefore have to pay the tax due by 31 January 2013 at the latest

Cook_County

Why is it CGT not income tax? Why was PAYE not withheld?

ben.bayliss

You say share options - are they held in an approved share option scheme? If so, which model does it follow?

The details make quite a difference.