There is a common mis-conception that if you give something away it doesn’t have any tax implications, unfortunately, that isn’t the case.
When you give away shares you usually work out your gain or loss as if you’ve sold the shares at market value. The market value is the price you would expect to receive if you sold them on the open market. This also applies if you sell them for less than their full value.
There are some exceptions:
- if you can claim Gift Hold-Over Relief
- if you give the shares to your husband, wife or civil partner
- if you give shares to a registered charity
To qualify for Gift Hold-Over Relief, the shares must be in a trading company, or the holding company of a trading group, and one of the following must apply:
- the shares aren’t listed on a recognised stock exchange
- you’ve at least 5 per cent of the voting rights in the company
You don’t pay Capital Gains Tax when you give (or otherwise dispose of) shares, to your husband, wife or civil partner, providing both of the following apply:
- you’ve lived together for any part of the tax year in which you made the gift
- the gift isn’t ‘trading stock’ (trading goods bought for resale)
You won’t have to pay Capital Gains Tax on a gift of shares to a registered UK charity.
HMRC have further details and a Help Sheet 295 containing further details.
You can ask HMRC to check your market valuation by submitting Form CG34 it will take at least 2 months.
Settlements Legislation S624/S660
If you think moving shares in your company between yourself and your spouse sounds like a great way to save tax, think again!
Since the 1930’s we have had Settlements Legislation which prevents you from giving income or assets to someone else in your family in order to pay less tax.
Where the anti-avoidance Settlements legislation applies, all income transferred by a settlement is treated as that of the settlor.