Cash for wife

We act for a trading company which is owned equally by a husband-and-wife couple in their mid-50s.

They are both directors of the company and each has an active role in its management and operation and receives a commercial rate of remuneration. Although they are not separating the wife wishes to retire and realise the market value of her 50% shareholding.

The company was started from nothing so the shares have negligible base cost; however any capital gain should be eligible for entrepreneurs’ relief.

The husband intends to buy his wife’s shares and the suggestion is that a new company is set up by the husband to act as the buyout vehicle issuing shares to him and cash to his wife in exchange for their respective 50% shareholdings in the existing company (the new company will obtain third party borrowings to fund the purchase of the...