Share capital on the balance sheet: paid and unpaid shares

In short: On the balance sheet, share capital sits under "Capital and reserves" as "Called up share capital". Shares still unpaid, such as £100 since incorporation, also appear as an asset, "Called up share capital not paid", and as unpaid on the statement of capital (GOV.UK: Life of a company). Taxley prepares the Company Tax Return (CT600) with micro-entity accounts for £49.95, filing the accounts at Companies House once the return is paid and finished.

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Key facts (checked on 4 October 2026)

What is share capital?

Share capital is the total nominal value of the shares a company has issued to its shareholders. Every share in a limited company must have a fixed nominal value, such as £1, and an allotment of a share without one is void (CA 2006 s.542). A company formed with 100 shares of £1 each has £100 of share capital.

Share capital starts on the day the company is formed. The Companies Act 2006 says its references to issued or allotted share capital include the shares taken by the subscribers to the memorandum on formation (CA 2006 s.546), so the founders' first shares count whether or not anyone has paid for them yet. Shares can't be allotted at a discount (CA 2006 s.580), so their price is never below nominal value, and any amount above it is share premium, kept apart from share capital. The nominal value also caps each shareholder's risk: a company is limited by shares when its members' liability is limited to the amount, if any, unpaid on the shares they hold (CA 2006 s.3). Unpaid share capital is therefore money a shareholder still owes the company.

Where does share capital go on the balance sheet?

Called up share capital is the first line under "Capital and reserves". Balance sheet Format 1 in the regulations lists it as item K.I, ahead of the share premium account, revaluation reserve, other reserves and the profit and loss account (SI 2008/409 Sch 1 Part 1). Capital and reserves must equal net assets, the total of the lines above them.

Micro-entity accounts use shorter formats in which "Capital and reserves" is a single item (K in Format 1), and a micro-entity's balance sheet need only show the items in those formats (SI 2008/409 Sch 1 para 1). Splitting K into called up share capital and the profit and loss account is still allowed as greater detail (SI 2008/409 Sch 1 para 3). Small-company formats show called up share capital as its own line. The figure itself is defined in law: the calls made on the shares, whether or not paid, plus capital paid up without a call and capital due on a specified future date (CA 2006 s.547). Capital never called and with no payment date is "uncalled" and sits outside it, and a company with uncalled capital should check the presentation with an accountant.

What does "called up share capital not paid" mean?

Called up share capital not paid is the amount shareholders still owe for shares that have been called up, shown as an asset because the company is owed that money. It is item A, the first line of the balance sheet formats, and small-company formats also allow it within other debtors (SI 2008/409 Sch 1 Part 1).

Shown at item A, called up share capital not paid adds to total assets less current liabilities but stays out of current assets. Companies House's online filing help describes the line as the amount called for when shares have been allotted but not received by the date of the balance sheet (Companies House WebFiling help). The amount appears outside the accounts too. The statement of capital that goes with a return of allotment shows the aggregate amount unpaid on the company's shares, whether on account of their nominal value or a premium (CA 2006 s.555), so the year-end balance sheet and the latest statement of capital should tell the same story.

Under the model articles, only the subscribers' shares can be issued without being fully paid: article 21, headed "All shares to be fully paid up", exempts shares taken by the subscribers on formation (Model articles, art. 21). Payment needn't be a bank transfer. Shares may be paid up in money or money's worth (CA 2006 s.582), and the release of a debt the company owes for a fixed sum counts as cash consideration (CA 2006 s.583). If the company owes a founder a fixed sum, for example for company costs paid personally, setting that debt against the share money can count as paying for the shares, as long as the agreement and the entry are recorded.

What does a balance sheet with £100 of unpaid shares look like?

A balance sheet with £100 of unpaid shares shows the £100 twice: as called up share capital under capital and reserves, and as called up share capital not paid at the top of the assets. Net assets and capital and reserves still match. The worked example below shows the same company with its shares unpaid and paid.

Worked example: Example Ltd at its first year end (100 ordinary shares of £1 issued at incorporation; illustrative figures)

Both columns balance at £1,600. In the unpaid column, total assets less current liabilities are item A of £100 plus net current assets of £1,500, which is cash of £2,400 less creditors of £900. In the paid column, cash is £2,500 and net current assets are £1,600. Called up share capital is £100 in both, because section 547 counts called capital whether or not it has been paid (CA 2006 s.547), and the profit and loss account is £1,500 in both, since paying for shares isn't income. Entering share capital with no matching asset leaves the balance sheet £100 short; leaving out both lines balances but understates net assets by £100, the mistake behind one question to Taxley's support team. Our guide to a company balance sheet that doesn't balance covers other gaps.

What happens when the shareholders pay for their shares later?

When the shareholders pay, the asset changes form. Cash at bank rises by the amount paid, and called up share capital not paid falls by the same amount, to nil once the shares are fully paid. Called up share capital doesn't change, because it already included the called but unpaid shares (CA 2006 s.547).

The bookkeeping entry is a debit to the bank account and a credit to called up share capital not paid, with nothing in the profit and loss account. Every company must keep records sufficient to show and explain its transactions (CA 2006 s.386), so the payment is best made from the shareholder to the company's own bank account, with a note of which shares it pays for. The next balance sheet shows nil for the current year beside last year's £100, because every item needs the corresponding amount for the previous financial year (SI 2008/409 Sch 1 para 7). Profit, net assets and the total of capital and reserves don't move, because cash rises by exactly the amount the shareholders' debt falls.

The statement of capital at Companies House changes as well. A confirmation statement must come with a statement of capital unless nothing the statement covers has changed since the last one was delivered, and the aggregate amount unpaid on the shares is one of the matters it covers (CA 2006 s.853D). Paying for the shares changes that amount, so the next confirmation statement should carry an updated statement of capital showing nothing unpaid on the shares. GOV.UK lists the statement of capital among the changes you can make when you file the confirmation statement (GOV.UK: Confirmation statement guidance).

What is share premium?

Share premium is the amount paid for shares above their nominal value, kept in a share premium account (CA 2006 s.610) directly below called up share capital. Ten £1 shares issued at £50 each bring in £500: £10 of share capital and £490 of share premium. Neither is a realised profit, so neither can fund a dividend (CA 2006 s.830).

What do you tell Companies House when the company issues more shares?

File a return of allotment on form SH01 within one month of allotting the shares, with a statement of capital showing the company's share capital after the allotment (GOV.UK: Life of a company). The statement gives the total number of shares, their aggregate nominal value, any amount unpaid and the particulars of each share class (CA 2006 s.555).

GOV.UK adds that a series of allotments can go on one SH01, sent within one month of the first allotment, and that where shares are paid for in cash the return gives the amount paid or unpaid (GOV.UK: Life of a company). For shares allotted for something other than cash, the form shows how far the company treats them as paid up. The accounts then follow the allotment. Called up share capital rises by the nominal value of the new shares, share premium by anything paid above it, and cash, or called up share capital not paid, by what the shareholders paid or still owe at the year end.

Does share capital affect Corporation Tax?

No. Corporation Tax is charged on profits, which the law defines as income and chargeable gains (CTA 2009 s.2). Money paid for shares is neither: it is capital the shareholders put in, so it adds nothing to taxable profits, and unpaid share capital isn't a cost the company can deduct.

Unpaid share capital doesn't normally bring a section 455 charge on loans to participators. HMRC's manual says that, since the First-tier Tribunal's decision in RKW Ltd v HMRC on 30 January 2014, it should not normally be argued that a section 455 charge is due on unpaid share capital (HMRC manual CTM61537). The same page adds that where a shareholder uses unpaid share capital to extract assets, profits or other value from the company, the targeted anti-avoidance rule in section 464A of the Corporation Tax Act 2010 should be considered. Paying for unpaid shares later changes no tax either: the company only swaps the amount owed for cash.

Dividends come from profits, never from share capital. A company may only make a distribution out of profits available for the purpose, meaning its accumulated, realised profits less its accumulated, realised losses (CA 2006 s.830). GOV.UK adds that dividends can't be counted as business costs for Corporation Tax (GOV.UK: Taking money out of a limited company). A new company with £100 of share capital and no retained profit has nothing to pay a dividend from. Our guide on how to pay a dividend from a limited company covers the profit test, minutes and vouchers.

How does Taxley handle share capital and unpaid shares?

Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House, keeps called-up share capital and any unpaid part on separate lines. Both print in the micro-entity or small-company accounts it prepares, in the statutory positions.

In the Advanced editor, "Called-up share capital not paid" is the first balance sheet line, before the fixed asset lines, and "Called-up share capital" and "Share premium account" open the "Capital and reserves" section. Simple mode has a "Share capital" line, and its "Show all lines" button adds unpaid share capital; share premium is entered in the Advanced editor. The accounts Taxley generates print "Called up share capital not paid" at the top of the balance sheet and "Called up share capital" under "Capital and reserves", leaving out a line that is nil in both years. Taxley's tax computation doesn't read the balance sheet, so the share capital figures you enter change no tax.

Taxley won't file a return with accounts until net assets equal capital and reserves to the penny, and it never balances them for you. When the gap equals the share capital, its message says the money is usually in cash at bank if the shares were paid for, and otherwise to enter the amount under "Called-up share capital not paid". For a company's first Taxley return, empty boxes in last year's column are filled from the accounts filed at Companies House, including any share capital not paid. A dormant company whose last-year figures hold only its share capital gets two one-click answers: "The shares were never paid for" or "The share money is in the bank".

Taxley records share capital as amounts only. It has no box for the number of shares or their class, and it doesn't file a return of allotment (SH01) or the confirmation statement; you file those yourself at Companies House. The fee is £49.95 with micro-entity accounts or £139 with small-company accounts, including filing the accounts at Companies House once the return is paid and the accounts are finished; you need the company's 6-character authentication code. Take the 30-second check to see whether Taxley fits your company, or see prices.

Frequently asked questions

Can a dormant company have unpaid share capital?

Yes. Paying for the shares the subscribers took on formation doesn't stop a company being dormant, because the Companies Act disregards that transaction (CA 2006 s.1169). GOV.UK likewise leaves out money paid for shares when the company was incorporated (GOV.UK: Annual accounts).

Is share capital the same as the money in the company's bank account?

No. Called up share capital records the shares issued and sits in capital and reserves, while cash at bank is a current asset (SI 2008/409 Sch 1 Part 1). The share money can be spent on the business, and the share capital figure stays the same.

Is unpaid share capital a debt the shareholder owes?

Yes. In a company limited by shares, a member's liability is limited to the amount, if any, unpaid on their shares (CA 2006 s.3). Once the shareholder pays, called up share capital not paid falls to nil and the bank balance rises by the same amount.

What if share capital was put in the profit and loss account by mistake?

Move it to called up share capital, item K.I in Format 1 (SI 2008/409 Sch 1 Part 1). The total of capital and reserves doesn't change, so the balance sheet still balances. Correct last year's figures too if the same error appears there, and check the retained earnings movement.

General information, not personalised tax or accounting advice.