One for all the accountants

[Chicken Runner61]

What is a Share Premium account and is it a good or bad thing to have in your books?

 

[Dave the OAP]

isnt it the difference between your values of shares on your portfolio from what you purchased/entered them as ?

 

[Buzzer]

It's the excess that someone has paid for a share above it's nominal value

Most shares nowadays are £1 nominal value - so if you pay £5 for it then £1 goes against the share account and £4 to the premium account.

Whether or not it's a good thing - dunno - I suppose it increases the net worth of a company but there's not a lot you can do with it.

disclaimer - this isn't financial advice. Please don't sue me

 

[Conkers]

I guess it's good in a way as people are paying more for your shares than issued for (I.e investor confidence) but at the end of the day it neither a good or a bad thing!

 

[cjd]

while we're on the subject of accountants/tax liabilities..........

The new CGT. I know that if the profitwhen selling a property (2nd home) thegain is above the lower tax threshold (? £38,000)the tax is 28%

However, if the gain was say, £75,000 and other earnings were £20,000, can some of the £75k profit be offset against the balance of earned ncome , up to the ? £38k threshold...(i.e. £38k less the £20k earned, leaving £18k).

Is the whole £75k at 28%, or, £18k at 18% and £57k at 28%...?

Hope this makes sense to someone who understands the new CGT.

 

[Conkers]

while we're on the subject of accountants/tax liabilities..........

The new CGT. I know that if the profitwhen selling a property (2nd home) thegain is above the lower tax threshold (? £38,000)the tax is 28%

However, if the gain was say, £75,000 and other earnings were £20,000, can some of the £75k profit be offset against the balance of earned ncome , up to the ? £38k threshold...(i.e. £38k less the £20k earned, leaving £18k).

Is the whole £75k at 28%, or, £18k at 18% and £57k at 28%...?

Hope this makes sense to someone who understands the new CGT.

I've only studied CGT for one day (doing a course at the moment) but surely if you are selling a 2nd property then tax thresholds don't come into it (assuming you are talking about one's income?).
You get your annual exemption of £10,100 and then pay CGT on the rest of the gain @18%.......or have I got the wrong end of the stick?
Note: I'm studying based on the 09/10 tax year!

Edit: Oh I see the rules have changed since June this year, I don't even want to look at the new rules otherwise i'm going to confuse myself!

 

[cjd]

I've only studied CGT for one day (doing a course at the moment) but surely if you are selling a 2nd property then tax thresholds don't come into it (assuming you are talking about one's income?).
You get your annual exemption of £10,100 and then pay CGT on the rest of the gain @18%.......or have I got the wrong end of the stick?
Note: I'm studying based on the 09/10 tax year!

Thanks for the reply, but typical.........after looking at the HMRC site for months with no clear indication from them.....have just looked again, and you can offset CGT against the lower thresholds of Income tax. This now means (i hope) that some CGT can be paid at 18% in the example I gave earlier.

PS: get them to teach you fromthe 10/11 tax year details. CGT is now 28% if your earnings exceed £37,400 (after personal allowances)

 

[Conkers]

I did briefly look at the new rules (i'm a glutton for punishment) and it does seem that any lower rate band you aren't using can be used against the gain on the 2nd property (upto £37,400).
It makes me sick to think i'm learning all these rules for an exam and they are already out of date!

 

[cjd]

I did briefly look at the new rules (i'm a glutton for punishment) and it does seem that any lower rate band you aren't using can be used against the gain on the 2nd property (upto £37,400).
It makes me sick to think i'm learning all these rules for an exam and they are already out of date!

Many, many thanks for your effort........bloody complicated isn't it....LOL..!

 

[El Presidente]

What is a Share Premium account and is it a good or bad thing to have in your books?

It's main uses are as follows:

All ordinary shares of a similar class have the same legal rights A share premium account allows a company to issue shares at different dates for different prices to reflect the value of the company at different dates.

For example, if I start up a company in 2006 and sell £1 shares at an issue price of £1 there is no premium. The company may do well, and perhaps needs fresh capital in a few more years. but the market price might be £4 by then, so the company could issue new shares for £4, of which (as Buzzer has already pointed out) £1 would be credited to share capital and £3 to share premium.

The share premium account is fairly useless EXCEPT for transactions such as share splits (bonus issues), where the new shares issued are effectively paid for (i.e debited) against the share premium account. This allows the company to increase liquidity into the market by increasing the number of shares that are available for trading. Other than that share splits are a bit of a con.

 

[aftershavedave]

while we're on the subject of accountants/tax liabilities..........

The new CGT. I know that if the profitwhen selling a property (2nd home) thegain is above the lower tax threshold (? £38,000)the tax is 28%

However, if the gain was say, £75,000 and other earnings were £20,000, can some of the £75k profit be offset against the balance of earned ncome , up to the ? £38k threshold...(i.e. £38k less the £20k earned, leaving £18k).

Is the whole £75k at 28%, or, £18k at 18% and £57k at 28%...?

Hope this makes sense to someone who understands the new CGT.

the gain is at 28% over your 2010/11 exemption limit (which is about £10,000 i think). so if the gain is under the post-June rules, it's £75,000 (say) less the annual exemption £10,000 = 65,000 at 28% (if it's a house). i'm unsure about offsetting unused income tax allowances under the new rules, you used to be able to....

 

[El Presidente]

I did briefly look at the new rules (i'm a glutton for punishment) and it does seem that any lower rate band you aren't using can be used against the gain on the 2nd property (upto £37,400).
It makes me sick to think i'm learning all these rules for an exam and they are already out of date!

What exam are you studying for? Is it Uni, AAT, ATT, ATII, ACCA or ICAEW?

 

[El Presidente]

while we're on the subject of accountants/tax liabilities..........

The new CGT. I know that if the profitwhen selling a property (2nd home) thegain is above the lower tax threshold (? £38,000)the tax is 28%

However, if the gain was say, £75,000 and other earnings were £20,000, can some of the £75k profit be offset against the balance of earned ncome , up to the ? £38k threshold...(i.e. £38k less the £20k earned, leaving £18k).

Is the whole £75k at 28%, or, £18k at 18% and £57k at 28%...?

Hope this makes sense to someone who understands the new CGT.

My understanding is that post 23rd June changes, of the £75,000 gain

£10,000 is exempt
£17,400 * 18% = £3,132
£47,600 * 28% = £13,328

Total tax payable = £16,460

 

[Conkers]

What exam are you studying for? Is it Uni, AAT, ATT, ATII, ACCA or ICAEW?

ACCA:
P5 - Advanced Performance Management
P6 - Advanced Taxation

Last 2 exams now

 

[seagullsovergrimsby]

If you're selling a 2nd property after owning it for 7 years is their still a taper relief ?

 

[Conkers]

If you're selling a 2nd property after owning it for 7 years is their still a taper relief ?

No such luck!

 

[El Presidente]

ACCA:
P5 - Advanced Performance Management
P6 - Advanced Taxation

Last 2 exams now

Good luck. The P6 examiner is a mate of mine and I mark P2

 

[cjd]

My understanding is that post 23rd June changes, of the £75,000 gain

£10,000 is exempt
£17,400 * 18% = £3,132
£47,600 * 28% = £13,328

Total tax payable = £16,460

Thankyou.

 

[The Peanut Roaster]

There are 3 types of accountant.

A good one and a bad one.

 

[saafend_seagull]

Good luck. The P6 examiner is a mate of mine and I mark P2

if i put BHA on my p2 paper this december, will you be nice to me?