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A shareholder is a person or a business who owns shares in a limited company. It’s possible to be the sole shareholder (so you own all of the shares) in your own company. You don’t necessarily need to have bought them. 

Can anyone be a shareholder?

Yes – anyone can buy shares in a limited company if the shares are listed on an exchange. You’re considered a shareholder if:

  • You started your own private limited company (“Ltd”) – in this case, you’re also a company director
  • You received shares in your employer’s company
  • You’ve bought shares in a public limited company (“Plc”) – for example, through a trading app like Freetrade or eToro.

I’m a sole trader – am I a shareholder in my business?

If you’re a sole trader, you’re not a shareholder in your business. This is because you and your business are one. But a limited company is a completely separate entity in which you can hold shares.

If you’re in a business partnership, you’re also not classed as a shareholder.  

Partnerships are basically a way for sole traders to work together. Both you and your partner will need to file (separate) Self Assessment tax returns, but you won’t have separate debts and assets.

How do I pay tax as a shareholder?

  • If you sell shares for a profit, you need to pay Capital Gains Tax (CGT) – but only if the profit is above the CGT allowance (£3,000 in the 2024/25 tax year)
  • If you sell shares from an ISA account, those profits are always tax-free
  • Sometimes profits from selling your employer’s shares are tax-free
  • If you make a loss selling shares, you can “carry forward” that loss to the next year and claim it then
    • This is a method of reducing your CGT the following year
  • If you earn dividends from your shares, and these dividends are worth more than the dividend allowance (currently £500), you also need to pay dividend tax on them
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