Illustration - share buybacks
You'll learn how to calculate the minimum number of shares a shareholder must sell back to the company in a share buyback, and how to work out the capital gains tax liability on that sale.
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In this lesson
- 0:00 Share repurchase and minimum shareholding calculation
- 0:26 Calculating total shares after buyback
- 1:09 Understanding share cancellation mechanics
- 1:58 Capital gains tax on share disposal
- 2:39 Applying Business Assets Disposal Relief
About this lesson
This illustration walks through a practical scenario where Seth's shareholding must reduce to 75% or less of its current level, showing you the step-by-step maths to determine total shares in issue after the buyback and the minimum shares he must sell. You'll also see how Business Assets Disposal Relief applies to share buybacks for qualifying shareholders, bringing the capital gains tax rate down to 14%. This type of calculation is likely to appear in your exam, so understanding the mechanics of how shareholding percentages change when shares are cancelled is essential.
Duration: 3m
Transcript
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