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CGT implications for transfer of shares between sp

My question is twofold on gifting private limited shares to a spouse and gifting to a friend

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I have shares in a private limited company from startup which are now worth £20k. I understand if I gift the shares to my spouse, I do not have to pay CGT. If my spouse subsequently sells the  shares for £45k, will they be subject to CGT for £25k or £45k?

If I gift the shares to a friend instead, can I claim gift relief and not pay CGT for same said shares? If my friend subsequently shares in the same way, are they subject to £45k CGT? Thanks.

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By Tax Dragon
18th Nov 2019 06:49

It's you and me again, Rob.

I guess you didn't appoint an accountant.

Last time round, you were using company funds to make investments. In consequence, it's possible that (if it would otherwise have been available) holdover relief won't apply. It depends on the precise facts - a good accountant could help you here, a web forum really cannot, unless you are prepared to publish your (members) accounts and discuss private details here... and bear in mind ANYONE might respond, and you won't know who they are.

But... why would you give your whole company away? It could increase the overall tax.

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Replying to Tax Dragon:
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By Rob Alam
18th Nov 2019 09:30

Thanks. This was a hypothetical question to get a second opinion and understand the differences between gifting shares to a spouse and non-spouse; so the values are not real. Really about if gift relief is applied does that put you in the same position as giving to a spouse i.e. defer CGT? And this is a minority shareholding, no employee or director complications.

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By Tax Dragon
18th Nov 2019 09:53

Well why didn't you say? Why did you make up a scenario which bears no semblance of reality?

Anyway… IF gift relief is available (there are conditions) and IF that relief covers the WHOLE gain and IF there are no income tax considerations (which depends on the facts) and IF there are NO OTHER complications – these are all quite big IFs, I think Matrix is omitting some important caveats - THEN you will no longer have the shares and you won't have paid tax on the disposal. So you will be in the same position either way.

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Replying to Rob Alam:
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By Accountant A
18th Nov 2019 11:58

Rob Alam wrote:

Thanks. This was a hypothetical question to get a second opinion and understand the differences between gifting shares to a spouse and non-spouse; so the values are not real. Really about if gift relief is applied does that put you in the same position as giving to a spouse i.e. defer CGT? And this is a minority shareholding, no employee or director complications.

If you are interested in tax, why not study for a professional qualification? You'd then be able to answer your own questions and give free professional advice to strangers on the internet.

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By Matrix
18th Nov 2019 07:17

There are so many things we don’t know such as whether any reliefs are available (what % do you own, are you a Director or employee?), but mainly why you are disposing of an asset to avoid CGT (if they are that valuable why not keep them or 50:50 with wife?), so I suggest you speak to your accountant who will know your respective tax positions.

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By Matrix
18th Nov 2019 09:33

Gift relief would only apply if it is a business asset, but the effect of both is NGNL.

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Replying to Matrix:
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By Rob Alam
18th Nov 2019 09:51

Excuse my ignorance but what is NGNL please?

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By SteLacca
18th Nov 2019 10:11

No Gain, No Loss.

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