Targeted dividends

 

My child is off to university. What are the tax consequences of giving him shares in my private company?

 

 

The idea of giving shares in a family company to children so as to allow them to receive targeted dividends by way of beer money is not new. This is typically done through the use of either alphabet shares (i.e. separate classes with bespoke dividend rights) or dividend waivers. However there are a number of potential pitfalls in setting up such arrangements both for family members and more generally for other individuals.

 

The first point to consider is how we get shares into the hands of the child. They could...