Specific speed and data details not provided. (ispreview.co.uk)
Note: “FUP” stands for Fair Usage Policy. Latency values are approximate and can vary based on network conditions.
When selecting a satellite internet provider, consider factors such as speed requirements, data usage, equipment and installation costs, and contract flexibility.
It’s advisable to contact providers directly for the most current information and to assess which service best fits your needs.
• Sage 50cloud is better for smaller businesses or businesses that still prefer the desktop-based setup but want the added benefits of cloud connectivity.
• Sage Business Cloud is fully cloud-based and offers a more scalable solution with more advanced features like CRM, advanced payroll, and project management.
Conclusion:
• Sage 50cloud is the older version but still widely used. It’s designed for businesses that want a desktop-based solution with some cloud features.
• If you’re considering upgrading, Sage 50cloud is a great option for businesses that need those cloud functions but don’t require the full range of features offered by Sage Business Cloud.
Employers can contribute to their employees’ pension funds, offering significant tax advantages for both parties. As of the 2024/2025 tax year, the annual allowance for pension contributions is £60,000. This is the maximum amount that can be contributed to an individual’s pension each year without incurring a tax charge. 
Key Points:
• Employer Contributions: These are typically made before National Insurance Contributions (NICs) are applied, resulting in NIC savings for both employers and employees. This is often facilitated through salary sacrifice arrangements, where an employee agrees to reduce their salary in exchange for equivalent pension contributions from the employer. 
• Tax Relief: Employer contributions are generally tax-deductible expenses for the company, reducing the corporation tax liability. For employees, these contributions do not count as taxable income, providing an immediate tax benefit.
• Annual Allowance: The £60,000 annual allowance applies to the total contributions made by both the employer and the employee. Exceeding this limit may result in a tax charge on the excess amount. However, individuals can carry forward unused allowance from the previous three tax years, potentially allowing for larger contributions in a given year. 
• Tapered Annual Allowance: For high earners, the annual allowance may be reduced. If an individual’s adjusted income exceeds £260,000, their annual allowance could be tapered down to a minimum of £10,000. It’s important to assess whether this applies to avoid unexpected tax charges. 
Considerations:
• Salary Sacrifice Arrangements: Implementing or enhancing salary sacrifice schemes can be beneficial, especially in light of the upcoming increase in employer NIC rates from 13.8% to 15% effective April 6, 2025. These schemes can help mitigate the impact of higher NICs. 
• Monitoring Contributions: Both employers and employees should monitor pension contributions to ensure they remain within the annual allowance limits, taking into account any carry forward from previous years.
• Professional Advice: Given the complexities surrounding pension contributions and tax implications, it’s advisable to consult with a financial advisor or tax professional to optimise benefits and ensure compliance with current regulations.
By strategically utilising employer pension contributions, both companies and employees can achieve significant tax efficiencies while enhancing retirement savings.
If the retiring directors gift their shares to the remaining shareholder, the transaction is typically considered a Potentially Exempt Transfer (PET) for Inheritance Tax (IHT) purposes rather than an immediate chargeable event for Capital Gains Tax (CGT). However, Capital Gains Tax (CGT) is more relevant here, as gifting shares is considered a disposal at market value.
Capital Gains Tax (CGT) Implications
When the retiring directors gift their shares, HMRC treats it as a disposal at market value, even though no money is changing hands. This means:
1. Market Value Rule Applies:
• The shares are deemed to be sold at their current market value, not the original acquisition cost.
• If the shares have increased in value since acquisition, the directors will face a CGT liability on the difference between market value and their acquisition cost.
2. Possible Reliefs Available:
The directors may be eligible for reliefs such as:
• Business Asset Disposal Relief (BADR) (formerly Entrepreneurs’ Relief) – If the shares qualify, the CGT rate could be reduced to 10%.
• Holdover Relief: If the shares qualify as business assets, they may be able to defer the gain by “holding over” the tax until the recipient disposes of them.
• Annual CGT Allowance: Each donor can use their annual CGT exemption (£6,000 for 2024/25 tax year).
Inheritance Tax (IHT) Implications
If the directors gift their shares, the transaction is classified as a Potentially Exempt Transfer (PET) under IHT rules, meaning:
1. No Immediate IHT Charge:
• If the donor survives for 7 years after the gift, it falls outside their estate for IHT purposes.
2. Taper Relief:
• If the donor dies within the 7-year period, taper relief may reduce the IHT liability depending on the number of years survived.
3. Exemptions:
• If the shares are part of a trading business, Business Property Relief (BPR) might apply, reducing the value for IHT purposes by up to 100% (if conditions are met).
Factor
Capital Gains Tax (CGT)
Potentially Exempt Transfer (PET) - IHT
Trigger Event
Immediate upon gifting
Only if donor dies within 7 years
Tax Calculation
Market value vs acquisition cost
Full value included if donor dies within 7 years
Reliefs Available
BADR, Holdover Relief, Annual Exemption
BPR, Annual Gift Exemptions
Impact on Donee
Receives shares at market value (for CGT on sale)
No immediate impact
Planning Considerations
If CGT liability is a concern, the directors could consider alternatives such as:
1. Transferring in stages:
• Gifting shares gradually over multiple tax years to maximize CGT allowances.
2. Using Holdover Relief:
• If the shares qualify, deferring the gain to the recipient and avoiding an immediate tax charge.
3. Retaining Some Control:
• Using different share classes or agreements to stagger ownership transition.
4. Sale Instead of Gift:
• If the remaining shareholder purchases the shares, the proceeds can be structured efficiently, e.g., via loan notes or installments.
Conclusion
If the retiring directors gift their shares, they are more likely to face CGT issues upfront, while the transaction will be a PET for IHT, which is only relevant if they pass away within 7 years. Careful planning, including reliefs like Holdover Relief or BADR, can mitigate tax exposure.
A share buyback occurs when a company purchases its own shares from shareholders. This can be an effective way to return value to shareholders, restructure ownership, or remove retiring shareholders. However, there are specific legal and tax implications to consider.
Key Considerations for Share Buybacks
1. Legal Framework
• Governed by the Companies Act 2006, particularly Sections 684-723.
• A company can only buy back shares if:
• It has **sufficient distributable reserves** or is financed through a permissible route (e.g. fresh issue of shares).
• The buyback is approved by shareholders via an ordinary resolution.
• The articles of association permit it (if not, they may need to be amended).
2. Financing the Buyback
A private company can finance a buyback from:
• **Distributable profits: Profits available for distribution as dividends.**
• Fresh issue of shares: New shares issued to raise capital for the buyback.
• Capital redemption reserve: If shares are bought back using capital.
3. Shareholder Approval
• A special resolution (if using capital) or an ordinary resolution (if using profits) must be passed by shareholders.
• The shareholder selling their shares cannot vote on the resolution.
4. Procedural Steps
The process involves the following steps:
Step
Document Required
Action Required
Board Approval
Board Resolution
Directors approve the buyback
Shareholder Approval
Shareholders’ Resolution
Obtain required shareholder approval
Contract Agreement
Share Purchase Agreement
Execute an agreement for the buyback
Payment Processing
Payment Records
Pay the selling shareholders
Statutory Filing
Form SH03
File with Companies House within 28 days
Capital Reduction (if applicable)
Form SH06
File if capital is reduced
Update Share Register
Share Register
Amend register to reflect buyback
Stamp Duty (if required)
HMRC Submission
Pay stamp duty if applicable
5. Tax Implications
• For the Company:
• The buyback payment is usually made from post-corporation tax profits, making it the same as methods like dividends.
• No tax relief is available for the company on the buyback cost.
• For the Shareholder:
• The amount received is usually taxed as a capital gain, subject to Capital Gains Tax (CGT).
• If the buyback is treated as an income distribution, it may be subject to Income Tax instead of CGT. This is if HMRC thinks shenanigins are afoot.
• Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) may apply if specific conditions are met. Basically own 5% or more and owner for a significant time.
6. Conditions for Capital Treatment (Favourable Tax Treatment)
To qualify for capital treatment rather than income tax:
• The buyback must be for the benefit of the trade.
• The shareholder must reduce their interest in the company.
• The shareholder must have owned the shares for at least 5 years.
• The company must remain unquoted after the buyback.
Pros and Cons of Share Buyback vs. Alternative Methods
Criteria
Share Buyback
Termination Payment & Gift
Cost to the Company
Higher (post-CT profits used)
Lower (deductible as an expense)
Tax Efficiency
Potential CGT treatment (if conditions met)
PAYE/NIC impact for termination payment
Complexity
Legal formalities with Companies House
Simpler but potential CGT for shareholders
Shareholder Impact
Immediate exit from shareholding
Potential liability for Capital Gains Tax
Steps to Implement a Share Buyback
Board Meeting
• Convene a meeting to approve the buyback in principle and draft resolutions.
Shareholder Resolution
• Pass an ordinary or special resolution, depending on funding source.
Drafting Buyback Agreement
• Outline terms, including number of shares, price per share, and payment method.
Filing with Companies House
• File Form SH03 (Return of Buyback)
• File Form SH06 (Reduction of Capital), if needed.
Update Company Records
• Update the share register and confirm changes in the next annual confirmation statement.
Tax Considerations
• Ensure compliance with CGT rules for shareholders and calculate any PAYE obligations if applicable.
Conclusion
A share buyback is a viable way to facilitate the retirement of directors while ensuring fair compensation. However, it may result in higher tax costs for the company. Exploring alternative options, such as termination payments followed by gifting the shares, could be more tax-efficient depending on the circumstances.
[Company Name]
Company Registration No: [Number]
Registered Office: [Address]
Minutes of the Board of Directors Meeting
Held on [Date] at [Location]
RESOLUTION:
“It was resolved that, in accordance with section 690 of the Companies Act 2006, the Company shall buy back [Number] of its own shares from [Shareholder Name] at a price of [Price] per share, subject to the terms of the Share Purchase Agreement. The Board confirms that the buyback is in the best interest of the Company and that the Company is solvent.”
Signed:
[Director Name]
[Director Name]
Form SH03 (Return of Purchase of Own Shares) - MUST be completed in the Companies House form, the below is just “data capture”
Company Name: [Company Name] Company Number: [Company Number]
Date of Purchase: [Date]
Number of Shares Purchased: [Number]
Nominal Value Per Share: [Value]
Total Consideration Paid: [Amount]
Declaration:
The Company confirms compliance with the Companies Act 2006.
Signature of Director:
[Director Name]
Share Register Update - MUST be completed in the Company’s register, the below is just “data capture”