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Issue:
4895
/
Categories:
Comment & Analysis
, BADR
, business property relief
, Capital gains tax
, IHTA 1984
, ITEPA 2003
, Capital Gains
What’s the problem?
Key points
- Preference shares are a common form of security to issue and a useful mechanism for ensuring there is no transfer of value under the employment related securities regime.
- Consider the accounting treatment of preference shares: it is an important commercial consideration and should not be ignored when designing the restructuring for tax purposes.
- Preference shares in many instances will be treated as ordinary shares for tax purposes.
- For CGT purposes a preference share will be a form of security.
- For BADR purposes a disposal of shares or securities will qualify for relief if the company has been the individual’s ‘personal company’ for at least two years prior to disposal.
- For IHT purposes we are typically concerned with whether the shares will qualify for business property relief (BPR).
When advising on various types of corporate restructures and takeovers preference shares are a common...
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