Tax on share premium for new shares ?

Discussion in 'Accounts & Finance' started by clyde123, Jul 13, 2019.

  1. clyde123

    clyde123 UKBF Newcomer Free Member

    25 2
    Is there any tax implication to a limited company when issuing new shares at a premium ?
    For instance, issuing 100 shares at nominal £1 each, but the company receives £1,000.
    I've been googling, but all the online answers talk about capital gains or other taxes to an existing shareholder who sells on shares at a premium, or the tax when existing share premium capital is used or paid out. I had thought my query was quite straightforward, but ...

    For background info, this is a brand new company, the intention is to raise capital for operating use, this particular capital (or at least the premium) will never be traded or regarded as having any value to the share purchasers.
    Look on it as a gift to the company. Permanent. From fully aware individuals, nothing untoward here.
    The existing or "main" shareholders are not concerned about any dilution of ownership.
    I am assuming this will be done by way of a separate class of share - no voting rights, no other rights. It's purely a way of getting funds into the company mainly from non-existing shareholders, with no expectations of those funds ever being repaid or traded. And importantly without creating any tax implications for the company.
     
    Posted: Jul 13, 2019 By: clyde123 Member since: Oct 1, 2009
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    14,911 3,165
    A premium paid for shares issued by the company is capital. It is not taxable income.
     
    Posted: Jul 13, 2019 By: Scalloway Member since: Jun 6, 2010
    #2
  3. clyde123

    clyde123 UKBF Newcomer Free Member

    25 2
    That was what I thought, but worried ... just in case ...
    Many thanks Scalloway
     
    Posted: Jul 13, 2019 By: clyde123 Member since: Oct 1, 2009
    #3