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Substantial shareholders exemption - family owned

Is the SSE applicable in these circumstances? Transfer of shares between family members

My client wishes to incorporate his two existing businesses into two separate limited companies with a holding company owning the shares in the two companies. He has plans to buy other busineses in the future and the sale of either of the existing businesses is also possible.

His has four adult children involved in the businesses and it is likely that there will be a transfer of shares to the children in the subsidiary companies from the holding company at some point in the future. As two children work in one business and two in the other, his preference is that they would hold the shares directly in the subsidiaries concerned and the holding company would continue to be the majority shareholder.

When he comes to transferring shares to the children, is there any reason why the gain arising on the transfer (it would be a gift) cannot be tax free as a result of the substantial shareholder exemption? 

Many thanks





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