Shareholders in a property company - likely tax level?

[FinallyMovingHouse]

Hi all

Just wondering if anyone knows the answer to this, as it will affect our decisions at this early stage. We were persuaded to go into a property company several years ago, being shareholders in it and put in an amount of money. We have had small dividends/money back over the investment time ( £15 k total in 4.5 yrs), but are now looking to withdraw and get any remaining moneys left out as our share. We are likely to get back approx £15k more than we have remaining in the company, i.e. the same amount as was originally invested. Does anyone know how this is taxed? We've never gone into anything like this before (long story as to why, but essentially the business would have folded without some property shareholders).
Many thanks in advance.

You need to speak to a professional tax advisor as the details of your wider financial circumstances will have a bearing.

Potentially there may be tax implications.

But like DogInATent says, it is important you speak to a tax advisor. This can be a complicated area.

To get you started on some background:
HMRC guidance
https://www.gov.uk/tax-sell-shares

A good article by The Times (scroll down to Capital Gains)
https://www.thetimes.com/money-mentor/income-budgeting/tax/tax-shares#:~:text=Do%20I%20have%20to%20pay,will%20have%20to%20pay%20tax.

Some good explanation from Tax Reform Group
https://www.litrg.org.uk/savings-property/capital-gains-tax/selling-shares-and-other-assets

There are definitely tax implications!

But it's the term "property company" that I worry may have specific implications that only a professional can establish.

Thanks all. We're definitely going to speak to an accountant, and I've just realised that we've declared the dividends/money back on our tax returns each year, so that bit is covered I think. It's the lump sum coming back that is more of the issue, being that it's not really going to be much more than was invested in the first place.
Sorry - feel like a bit of an idiot, but just wanting to know an approx amount that I might need to save from the money towards a tax cost...we just won't spend that bit.

You need a tax specialist. Who may or may not be an accountant.

I suggest not spending any of it until you're certain how much you'll need to pay in tax.

It isn't an accountant you need, it's a specialist tax advisor.

Probably not. Most practising chartered accountants are perfectly capable of dealing with dividends/capital distributions from a limited company - it's their bread and butter.

To the OP, you need to establish in what form you're getting the money, whether dividends or a capital sum, and if the latter, whether the capital sum is a buyback of the shares or capital distribution. The latter will be liable to income tax at personal dividend tax rates, the latter will be liable to capital gains tax, but you may be eligible for business asset disposal relief to pay CGT at a lower rate rather than the main rates.

To a large extent, the nature of the repayments are outside your control as the company directors will be the ones who decide whether the sums are capital or dividends. Professional advice may have been helpful for you a while ago if you had any influence as to how they were going to repay you, but if you've no influence, then it's a fait accompli!

Depends on how you’re getting the money back and what your overall income level is. You could be looking at anything between v little tax and up to 40% tax. You need to speak to an accountant/tax advisor and they will be able to work this out for you.

This is really helpful Taxguru, as my DH is speaking to the directors soon. I do know that it'll be repaid to us in 3 lump sums (first one being the largest) and I understood that a buyback of the shares are happening. We've had dividends, which we've paid tax one, so this is the 'getting out' buyback. I'll send this info to my DH for his discussions with the directors. x