HELP! Reducing CG Tax by making a gift of shares?

singo

Hi, I'm a long time reader but new to the posting and I'm hoping someone can help me with a question I have.

My mum has some shares in a Ltd company which she's held for many years. The company is now being bought out by a larger company and my mum will sell her shares for around £50K. I understand she will be liable for CG tax on everything over £9600 but is there some way of avioding some of this by passing on some of the shares to our family before the sale? The company has asked that shares are not re-registered for other people but did mention we can put them in someone elses name somehow - in trust or something like that?

for informaiton
My Mum is nearing retirement and has very little in savings. My father is disabled and gets a disability allowance.

Apologies for being a bit vague I have no finanical knowledge other than to look here! I'm actually tempted to get some professional advice - if you think that's the right way to go please let me know.

RayWolfe

She will only pay CGT on the difference between the price paid for the shares and the price she sell them for, not on the £50K. The value of the shares for CGT purposes is the same whether she sells them or gives then away, i.e. £50K

singo

Thanks for the information. My mother has had these shares for about 20 years after she was given them by her mother so we don't have an initial vaule to base this on. Any idea what we need to do in this situation?

olbas_oil

Probably the most important thing to determine is the date of disposal. In most takeovers, this is when the offer goes unconditional, and your Mum has made an irrevocable acceptance, though you should take advice on this (and the rest!)

If it is still in the future (especially good if after April 6th), you may be able to do something... (entirely legally)

There are two forms of ownership:
Beneficial Interest and Registered ownership. Thus I could be the registered owner of something, but have only a partial share (or none at all) in the beneficial intrest.
In CGT terms it is the beneficial owner who is assessed for tax.
The cleanest way is to give half the shares to your father. Ideally this would involve transferring the registered holding into his name, but even if she only wrote down the gift and had it witnessed (or even in fact just said 'these are yours' and they didn't later contradict it) that act would bring in two amounts of CGT allowance into play. It wouldn't be very well documented, and HM Customs might tut a bit, but each would be perfectly entitled to enter half the gain onto their self-assessment forms.
Other family members are not so useful. This would be a transaction that itself would be deemed as a disposal at market value (even if they were given away).
Can the disposal be split across two tax years? Maybe she gives half to her husband now, and they each give (sell is tidier) half to a son. That way she and her spouse have made a quarter disposal each in 2008-9 (to the sons). The gain will be a quarter of £50k - acquisition cost, say £22k = £7k, within the allowance.
Next year all four make the disposal to the company. Husband and wife each have another £7k gain (within allowance). Sons have no gain.

As I say, you'd need to check, dates, figures and interpretation, but I wish you luck and hope you manage to avoid your mum paying anything to Gordon so he can subsidise bankers bonuses.

RayWolfe

singo wrote: »

Thanks for the information. My mother has had these shares for about 20 years after she was given them by her mother so we don't have an initial vaule to base this on. Any idea what we need to do in this situation?

The registrars should be able to give you the price of the shares on the acquisition date. If not, try here:
http://finance.google.co.uk/finance
They have historic prices for UK shares.

singo

Olbas_Oil,

Thanks very much for you assistance with this. It definitely sounds like it's worth pursuing further.