Benefit and shareholder

Thecrazy1

Hello there,

I am currently in receipt of ESA. My Brother started his own business and made his girlfriend a 20% limited shareholder. They have now split and he wants to transfer the shares to me. However, I am worried that this will affect my benefit. Any ideas please.
Thanks

00ec25

obviously shares are classed as capital and so count towards your means tested capital limit

that said, the value attributable to a (very) minority shareholding in a "closed company" would be low or negligible since there is no ready market for such shares other than selling to the principal shareholder who, to an extent, could thus name his price such a 1p per share.

valuing shares in a closed company is a rather specialist area because it would require a valuation of the whole company and that is not something you can do on a whim (or cheaply)

Thecrazy1

Thank you. I don't actually know why the means tested limit is but I assume I can easily find out. I wonder if I need to inform the benefits office and whether I need to fill in an SA. Or if the director deals with this. If it will affect my benefits I will sadly have to tell him I can't help him.

Pennywise

Nothing to stop the shares being transferred to him making him the 100% shareholder.

trailingspouse

Why does he need someone to have a 20% shareholding? From my understanding, he would need to pay you 20% of the profits of his business - apart from brotherly love, why would he do that?

Will he just be 'giving' you the shares, or is he expecting you to buy them from the ex-girlfriend?

OH and I are 50-50 shareholders in our business - which means I get 50% of the profits. I certainly wouldn't just give them to someone else.

Thecrazy1

I think it the amount of tax he will pay. It allows someone else to take advantage of the personal allowance. I was not sure if you are allowed whilst on ESA

Pennywise

Thecrazy1 wrote: »

I think it the amount of tax he will pay. It allows someone else to take advantage of the personal allowance. I was not sure if you are allowed whilst on ESA

Ah, so, he thinks he can pay you dividends etc., then you give him the money back, and he pays lower tax. That's tax evasion.

The income would be "yours" for tax/benefits purposes, and may well reduce your benefit entitlements. Would only be beneficial/legal if you kept the money he "paid" you as a shareholder.

Best not to get involved - he'll be the winner and you could be the loser.

Thecrazy1

I think the intension was for me to get the money and I would have to show that I was doing something for the company.

Pennywise

If you work for his company then he should pay you a reasonable wage for the work you do. No need to complicate things by making you a shareholder.

Comms69

Thecrazy1 wrote: »

I think the intension was for me to get the money and I would have to show that I was doing something for the company.

shareholders don't need to show anything of the sort.


Why is the ex just giving up these shares....

Thecrazy1

I guess I need to find our more. His accountant said a shareholder has to have an interest in the business. As he has split with his girlfriend he is going to transfer the shares. I don't think she wants to have the shares as it affects her working tax credit.