Tax on free shares

Tax on free shares

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The owners of a limited company purchased for £3 million in March 2013 have agreed to transfer 5% of the shares to an individual at nil value.
 
I am trying to understand the tax implications on the shares. Assuming the company is still worth £3m should the 5% shares be valued at 150k or is there an argument to value them lower as the 5% represent a minority interest.   
 
Presumably the tax payable would be (capital gains) at 28% on the total value of the shares ?
 
If the recipient was an employee could the tax be reduced ?  
 
Any suggestions would be appreciated.

Replies (5)

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Portia profile image
By Portia Nina Levin
02nd Sep 2014 17:10

I've a suggestion

Get your client some paid for advice from somebody that knows about this sort of thing.

You do rather appear to be wandering around Syria armed only with a tube map.

Thanks (3)
By johngroganjga
02nd Sep 2014 17:21

I agree that your client needs proper advice.  But I will try to set you off in what I hope is the right direction.

First question - why are the your clients gifting the shares?

Second question - in what relation does the donee stand to (a) the donors and (b) the company whose shares are being gifted?

Third question - is the company a trading company?

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By duncanedwards
02nd Sep 2014 18:07

Is this

the same question you posted previously?

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By johngroganjga
02nd Sep 2014 18:44

Previous question was from the point of view of the recipient, who was stated to be a "colleague" of the OP and an employee of the company whose shares he was receiving.

This question seems to be from the point of view of the transferors.

So the questions are different but the facts are clearly the same.

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Replying to ireallyshouldknowthisbut:
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By duncanedwards
02nd Sep 2014 19:00

Ta

johngroganjga wrote:
So the questions are different but the facts are clearly the same.

Oh, OK thanks.  I skim read and had a feeling of deja vu.

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