My client owns 60% of the shares in a family investment company which he has owned for many years. He wishes to pass some shares for the benefit of his children and grandchildren (none of whom work for the company) to reduce his shareholding to 40% but does not know whether he should make a trust or simply make outright transfers to them. What are the tax issues to consider?
Answer
Your client will be making a gift and therefore there should be no stamp duty liability; however he owns an investment company so we can assume that it qualifies for neither business property relief for inheritance tax purposes (per IHTA 1984 s 104) nor business asset hold-over relief for capital gains...
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My client owns 60% of the shares in a family investment company which he has owned for many years. He wishes to pass some shares for the benefit of his children and grandchildren (none of whom work for the company) to reduce his shareholding to 40% but does not know whether he should make a trust or simply make outright transfers to them. What are the tax issues to consider?
Answer
Your client will be making a gift and therefore there should be no stamp duty liability; however he owns an investment company so we can assume that it qualifies for neither business property relief for inheritance tax purposes (per IHTA 1984 s 104) nor business asset hold-over relief for capital gains...
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