Share buybacks • Sussex
Company Purchase of Own Shares in Haywards Heath
A company buying back a shareholder’s shares is a common way for someone to exit a business. Done right, it can be taxed as a capital gain rather than income. We plan it, apply for clearance and handle the filings.
- Capital or income treatment planned
- HMRC advance clearance applications
- Capital reductions to create reserves
- Companies House filings and stamp duty
Getting the tax treatment right
A share buyback is normally treated as a distribution taxed at dividend rates. It can instead be treated as a capital disposal, potentially qualifying for Business Asset Disposal Relief, if conditions are met. These include the company trading, the seller usually having owned the shares for at least five years, and their stake being substantially reduced. We check this before anything happens and can ask HMRC to confirm in advance.
What we handle
- Checking the company has enough distributable reserves
- A capital reduction by solvency statement if reserves need creating
- HMRC advance clearance for capital treatment
- Board and shareholder resolutions with your solicitor
- Companies House forms and stamp duty on the purchase
- Updating the share register and the remaining shareholders’ position
Buybacks often form part of a wider restructure or succession plan.
Share buyback FAQs
- Is a share buyback taxed as income or capital?
- By default it is income, taxed like a dividend. If the conditions for capital treatment are met, it is taxed as a capital gain instead, which is often cheaper.
- Can the company pay in instalments?
- The shares must normally be paid for in full when bought back, but there are ways to structure deferred payments. We will explain the options.
- Is stamp duty payable?
- Stamp duty is usually due on the purchase price above a small threshold. We prepare the paperwork.
A shareholder looking to exit?
Book a free consultation with our Haywards Heath team.
This page is general information, not legal or personal tax advice.