gift hold over relief - does a limited company gifting shares to an existing shareholder qualify?

[eh32322]

hi!

i am involved in a transaction as follows:

the current share distribution is as follows:

Alice 25%
Bob 25%
Charlie Events Ltd 50%

Charlie Events Ltd would like to gift shares to Alice and Bob such that the share distribution will be:

Alice 42.%
Bob. 42.5%
Charlie Events Ltd 15%

would all parties be able to claim gift hold over relief or would any be liable for CGT?

many thanks!

 

[Gyumri]

Have a read here to decide:

Capital Gains Tax relief on gifts and similar transactions (Self Assessment helpsheet HS295)

Find out how gifts are treated for Capital Gains Tax.

www.gov.uk

 

[David Griffiths]

Have a read here to decide:

Capital Gains Tax relief on gifts and similar transactions (Self Assessment helpsheet HS295)

Find out how gifts are treated for Capital Gains Tax.

www.gov.uk

But bear in mind that limited companies do not pay capital gains tax. They pay corporation tax on chargeable gains realised.

The document linked does state that holdover relief is only available to individuals and trustees.

 

[Gyumri]

So hold-over relief would not be applicable to the company if it gave its shares to the individuals? I haven't read the nitty-gritty regarding such a transaction but the information is on the above link.

 

[David Griffiths]

Without researching more than above I don't think so. I think that the company would be taxed on a chargeable gain based on market value. And depending on circumstances, it's possible that Alice would have an income tax liability of the value of the shares - certainly if she is an employee.

 

[WaveJumper]

A question for one's accountant possibly

 

[Bobbo]

hi!

i am involved in a transaction as follows:

the current share distribution is as follows:

Alice 25%
Bob 25%
Charlie Events Ltd 50%

Charlie Events Ltd would like to gift shares to Alice and Bob such that the share distribution will be:

Alice 42.%
Bob. 42.5%
Charlie Events Ltd 15%

would all parties be able to claim gift hold over relief or would any be liable for CGT?

many thanks!

What connection do Alice and Bob have to Charlie Events Ltd?

Why does Charlie Events Ltd "want" to do this?

 

[eh32322]

What connection do Alice and Bob have to Charlie Events Ltd?

Why does Charlie Events Ltd "want" to do this?

there is no connection other than friends and mutual shareholders ( :

Charlie Events Ltd just realised Alice and Bob have put in a disproportionate amount of effort and deserve to be rewarded with a bigger proportional shareholding.

 

[eh32322]

thanks so much for all the replies! : )

 

[eh32322]

perhaps Charlie Events Ltd returning shares to the company and then reducing the overall shares is a possibility with less implications

www.gannons.co.uk/cases/return-of-unwanted-shares-to-a-company/

 

[David Griffiths]

perhaps Charlie Events Ltd returning shares to the company and then reducing the overall shares is a possibility with less implications

www.gannons.co.uk/cases/return-of-unwanted-shares-to-a-company/

Given the complexity of the steps involved in that transaction, it suggests that proper professional advice is pretty well essential. HMRC clearance would be required and you'd also need to check if the company is caught by the value shifting provisions of S29 TCGA 1992 of the targeted anti avoidance legislation