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Gift of shares to children over 18

Gift of shares to children over 18

A 100% shareholder/director wants to gift his 2 children 15% of the business each by issuing B shares enabling occasional dividends, what is the tax implication?

I assume since the 2 children are connected parties cgt will be chargeable in the market value of the shares if transferred out of the 100%, correct?

What if new B shares were created on top of the ordinary shares, who would be responsible for paying the tax for shares issued under market value?

Finally, with B shares, where should the dividend / voting rights be laid down to satisfy hmrc if challenged?

Thank you


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By taxguru
30th Jan 2013 09:53

If the company is issuing fresh B ORD shares to the children I can't see any CGT implications. Give them cash gift (hope inheritance tax rules don't apply to you) to pay for the subscription.

As to dividend/voting rights etc first do make sure there is nothing restrictive in the Articles. Then write a board resolution, followed by issue documents (brief terms and conditions of the issue and may be an application form for the children to sign).


Thanks (1)
By Applied
30th Jan 2013 11:11

Thank you for your comments......

What would the cost of the B shares be based on? Would it be the market value of the ordinary shares or something different?

Thanks again

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By taxguru
30th Jan 2013 11:19

It should be based on market value.

Thanks (1)
30th Jan 2013 10:24

The CGT implications...

... are in S.29(2) TCGA 1992.

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30th Jan 2013 11:51

If it's a trading company...

... holdover relief can be claimed.  I'm not sure if you could have it apply to a deemed disposal under S.29(2), but he could issue the B shares to himself initially, and then gift them to the children with holdover.  The IHT disposition is the same and is potentially exempt, if it isn't covered by BPR.

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