CGT question

deltacharlie26

Hi,
I own 49% of a private unlisted company, my son owns the other 51%. About eight years ago I gave 25% of my shares to my other son at nil cost. He drew the dividends due whilst he worked for the company. Two years later he parted from the company and gave the shares back to me, also at nil cost.

My question is: In my naivety at the time I didn't think CGT would apply but since reading recently about CGT I am not so sure. Does anyone know if I need to speak to an accountant? Six years is almost up since the last movement in the share ownership so not sure if this is relevant?
Any help appreciated.
Regards,
DC

Elaine_Wilson

What you need to do will depend upon the figures.

When you gave your son the shares eight years ago that was a chargeable disposal for CGT purposes. The disposal value would be deemed to be the market value at that date. You may have an undeclared liability on this.

When the shares were given back to you your son would have the potential liability on any increase in value of the shares over that two years. If you were paying out substantially all the profits as dividends than this may not be a problem.

Remember that you would each have had an annual exemption to set against any profits on the disposals.

Also you should note that the value of 25% of the shares will not necessarily be 25% of the total value of the company.