Growth Shares (CGT)

GazzHam1966

Hi all.

I had some growth shares which I bought through my company in Nov 23. My company was sold in Feb 24.

I will not receive any proceeds from the Growth Shares until my company potentially meets targets which will be finalised in Feb 25 and Feb 26.

I understand that I need to pay CGT as if I received the entire proceeds as if my company had met the targets.

So essentially, I need to pay a large tax bill without receiving any funds. 

Does that make sense and just checking that is right?

Thanks

mybestattempt

GazzHam1966 said:

Hi all.

I had some growth shares which I bought through my company in Nov 23. My company was sold in Feb 24.

I will not receive any proceeds from the Growth Shares until my company potentially meets targets which will be finalised in Feb 25 and Feb 26.

I understand that I need to pay CGT as if I received the entire proceeds as if my company had met the targets.

So essentially, I need to pay a large tax bill without receiving any funds. 

Does that make sense and just checking that is right?

Thanks

From my reading of the HMRC guidance, my understanding is:

If the future proceeds/consideration for the shares is 'ascertainable', (meaning the amounts depend on events before the date of disposal) there is only one capital gain but at it may be possible to pay the CGT by instalments:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14910SA

The terms of the sales agreement will establish whether the proceeds/consideration is unascertainable, that is, dependant on events after the disposal of the shares:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14850


If the proceeds/consideration is 'unascertainable' there will be separate CGT computations, the first at the disposal date (based on valuation of the shares at that date) then when each of the instalments are paid:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14950