Client advised me of total UK quoted share dividends received 2018/19.
I then asked for a full breakdown of the companies invested in and their respective dividends.
She then mentioned that some of the shares were "owned or earmarked" by her as parent for their minor child in respect of parental christmas/birthday gifts. I am conscious that parental bare trust income for minor child is not tax reportable on parent if EACH parent has gifted capital giving rise to income of £100 or less per annum from parental gifts to child.
From what parent has told me so far I suspect that rather than the Plc shares being broker registered in name of "parent re a/c child A", I think that the shares may just be registered in parent's name with a mental note made by parent that when minor child becomes an adult the "gifted" shares will be transferred to the adult child.
In the past I have dealt with these irritating bare trusts but the parent has always gotten the stockbroker to show the shares held by, say, "Mrs A Bloggs a/c AB" for her minor child Augustus Bloggs. And where the parent has many children then the stockbroker has created separate parental accounts for each minor child.
But if in the present case the "earmarked" gifts to minor child are held in the same stockbroker account as the parent's is it still possible for me to get my tax scalpel out and cut out of the parent's dividend list all of the "child's" dividends (which would in total be less than £100) which parent advised are only "mentally earmarked" for the child and which child will receive sometime after they come of age.
Or would HMRC attempt to say that there is no paper trail to indicate that the shares were "owned" by the child and so all of the dividend income must be taxed on parent.
There should not be any stamp duty implications were mother to transfer any of the earmarked shares to the adult child, but CGT may be an issue for the mother depending on her other CGT disposals. CGT would not have been an issue had the shares been held in a stockbroker account for the minor child from the word go.