Jennifer Adams considers the main reasons why some shareholders of a family-owned company may consider a purchase of its shares and the tax implications of doing so.
Retirement for a family company member can be an emotive event. Someone who has spent much of their working life building up that business now has to hand over the reins to another.
A more practical problem is finding a tax-efficient method of extracting monies. The realistic option is via the capital route, as any capital gains tax (CGT) charged will be less than taking a salary, bonus or dividend. Withdrawals as capital can be effective either as a capital distribution on winding up (difficult and impractical if the company is continuing to trade) or by the sale of shares - either to an individual (external or)