Preferred treatment

04 May 2010

Issue: 4253 / Categories: Forum & Feedback

A shareholder sold both his ordinary and preference shares in a limited company. While it is confirmed that entrepreneurs’ relief will potentially apply to the gains on both types of shares, the distinction between share types is still important in determing whether there is a ‘personal company’ under TCGA 1992, s 169I(6)(a)

Our client sold his ordinary shares in a trading company. We are confident that all the circumstances of the disposal – the trade carried on by the company etc. – mean that our client will be eligible for capital gains tax entrepreneur’s relief.

He also held preference shares in that same company; these had no voting rights or conversion rights just the right to a fixed dividend. These shares were sold at the same time as the ordinary shares and at a considerable profit over their cost.

Is this gain treated as an ‘associated disposal’ and therefore the gain eligible for entrepreneurs’ relief?

Readers’ views are welcomed.

Query 17 591 – Stumped

Reply from Scorpio

Stumped will be pleased to learn that potentially entrepreneurs’ relief will be available in relation to the gains arising from the disposal of both classes of shares in this company.

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