Tax on company split

le_loup

If I own shares in a company that is dividing into two with new shares being issued, is there a tax implication?
If so, would it be income or capital?

pjclar02

It depends - will the newly formed company be owned by the same shareholders in the same proportion as the original company?

antrobus

le_loup wrote: »

If I own shares in a company that is dividing into two with new shares being issued, is there a tax implication?
If so, would it be income or capital?

Depends on how its done. You're talking about a demerger and want

CTM17250 - Distributions: demergers: introduction
http://www.hmrc.gov.uk/manuals/ctmanual/ctm17250.htm

OK, perhaps you don't want it, but that's where the answer lies. Broadly speaking, a properly conducted demerger doesn't have any tax consequences for the shareholder at all

le_loup

pjclar02 wrote: »

It depends - will the newly formed company be owned by the same shareholders in the same proportion as the original company?

Yes it will .... so there is no REAL gain at the off.

le_loup

antrobus wrote: »

Depends on how its done. You're talking about a demerger and want

CTM17250 - Distributions: demergers: introduction
http://www.hmrc.gov.uk/manuals/ctmanual/ctm17250.htm

OK, perhaps you don't want it, but that's where the answer lies. Broadly speaking, a properly conducted demerger doesn't have any tax consequences for the shareholder at all

Phew! I will go there. Thanks