Director resignation and Taxation for sold shares

[Anon_2011_2011]

Hi

I am looking to resign the directorship of a small limited company in which I own 33% of the shares.

If sale of the share capital results in a loss can this be offset against CGT and future income tax?

Would I still be considered to be a Connected Person if the shares are sold after resigning as a director? I noticed there is a suggestion that you may not be classified as a Connected Person in terms of claiming a CGT loss if it is for 'genuine commercial acquisitions or disposals of partnership assets'.

Any advice very much appreciated.

 

[SteveHa]

As a 33% shareholder you will still be a PSC until you dispose of the shares.

The genuine commercial reasons is a part of the anti-avoidance legislation. If you are genuinely exiting the company then you shouldn't be caught.

Capital losses cannot be set off against income (except in very limited circumstances, which it doesn't sound like will apply), but the loss should be available to carry forward to be set-off against future capital gains.

 

[Anon_2011_2011]

Thanks for the feedback. The shareholding is in 2 businesses, one of which is a development business which is about to crystallise shortly on the basis of a land development agreement. If planning approval is not achieved the agreement (and shares) effectively become valueless. In this situation could the be classed as Negligible Value Shares and then be offset against future income?

 

[SteveHa]

If the shares do become of negligible value then first and foremost be sure to ensure that everything is properly documented. That done, relief is available sideways against income (i.e. in the year that they become of negligible value). If the loss is carried forward, then it becomes a capital loss as usual, and not relievable against income.

Be careful with losses if the shares were EIS shares. Relief will be restricted by the amount of EIS relief claimed when the shares were subscribed for.