gifting shares to wife

gifting shares to wife

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A client  is considering selling his company and /or increasing dividend payouts.

He wants to gift 49 out of 100 issued ordinary shares to his wife who is the company secretary only.

The shareholdings will then be 51:49 ratio with full voting rights to each shareholder.

I cannot see any CGT or SDLT taxes due.  Do colleagues agree with this?  

Can colleagues see anything wrong with this approach?

Are there any other implications that I should consider?

Thank you.

 

 

 

Replies (10)

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By Matrix
05th Jun 2023 16:52

davidbarry wrote:

Are there any other implications that I should consider?

The loss of BADR perhaps.

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By Ruddles
05th Jun 2023 16:58

Lots of things to consider:

BADR, as above
Single or multiple share classes?
Dividends to be paid pro-rata?
How stable is the marriage?

One thing that I can say with reasonable certainty - there should be no SDLT to worry about ;¬)

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By JCresswellTax
05th Jun 2023 17:00

Don't see any tax issues with the plan. He is giving away 49% of his company and that should be considered, however, the wife may be entitled to half anyway if they divorce, so not a massive consideration.

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By Tax Dragon
05th Jun 2023 17:34

You ought to tick a box somewhere to record that the tests in the "unless" part of s421B(2) ITEPA 2003 are satisfied (assuming they are).

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Replying to Tax Dragon:
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By More unearned luck
05th Jun 2023 18:55

Don't you mean s421B(3)? Is there a tickable box somewhere? It seems to me that the exception in s421B(3) applies automatically and isn't subject to the making of a claim or on giving notification to HMRC*. Of course, there is nothing wrong in the company and H&W mentioning it to HMRC.

*If that is tosh then Richard is no longer around to put me straight, alas.

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Replying to More unearned luck:
By Ruddles
05th Jun 2023 19:21

I believe that TD was referring to one’s own records, to evidence that one has considered the conditions for exception and are happy that it applies.

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Replying to Ruddles:
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By More unearned luck
07th Jun 2023 11:28

Oh!

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By Cloudcounter
05th Jun 2023 21:55

It is probably true that the wife would be entitled to half of the joint assets on divorce, but that would normally mean a cash settlement which takes into account the value of the shares, not 50% of the shares as such. If the shares are gifted there is always the possibility that they could be retained by a disaffected ex, which could make life interesting.

The other approach to this is to recognise that she is entitled to half in any event, so he might as well give the shares away now, while he still likes her!

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Replying to Cloudcounter:
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By DKB-Sheffield
05th Jun 2023 22:06

And... depending on circumstances, W could be entitled to 50%+ of the cash value of the 51% (H's shares) AND retain the 49% (W's shares). Equally, the same could be said v/v.

It ain't always 50:50 in a divorce settlement!

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By davidbarry
06th Jun 2023 10:01

There is no looming divorce. Rather it is a sale of a business together with remnants of a dividend policy cynically reduced.

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