Share this content

PET/IHT/Investment Company Dillution

PET/IHT/Investment Company Dillution

Didn't find your answer?

Scenario is a property investment company, probably not going to qualify for BPR although there was some development work many moons ago.

Owned by parents, 60s, starting to thing about IHT planing.  They would like to put part of company in adult childrens name.

If we simply transferred a % of the shareholding to children then we would have a PET and a immediate CGT charge with little chance of mitigation.

We're mulling over, therefore, a new share issue to children and dilute parents.  I'm satisfied there are no Employment Related Securities issues or similar.  As there is no disposal, clearly there is no CGT.

However this will dilute value of parents shareholding, and I'm thinking that as its a concious decision (rather than being a passive shareholder in, say, a listed company which issues more shares), this must be a PET based on reduction in estate.  Q - am I thinking along the right lines on this point? 

Replies (2)

Please login or register to join the discussion.

By George Attazder
27th Nov 2012 14:06

Kind of

Yes. There's a disposition for IHT purposes, courtesy of S.98 IHTA 1984.

But, there will also be a CGT disposal, courtesy of S.29(2) TCGA 1992.

Thanks (0)
By girlofwight
10th Dec 2012 20:00

Belatedly, thanks - back to drawing board I feel.

Thanks (0)
Share this content