income-shifting

[garnet]

I'm not certain that the dividends not coming back is enough to say there is no retained interest. There could be an expectation of inheriting them back at some future point for example.

But, ignore that and assume the recipient has total use etc, this then improves their income position. This just might, under some circumstance, be an interest. e.g. it enable the aged parent to pay nursing home fees which were previously paid by the settlor.

No idea of any cases in the area; but if the tax take on the overall block of money reduces - which it could well if it were diverted to the parents by the gift of shares rather than the gift of post tax income I would expect HMRC may taker an interest.

That is it. I spoke to my acct and they say the same. Gifting shares to someone (not in your family) is fine, even new class of shares. Paying divi to these shares is fine as well.
Get the divi back to you somehow is NOT GOOD.

Do you know any cases where this has been disputed by HMRC? Not getting the divi back but just gift shares and pay divi.

[mudskipper]

If it's a case of "I'd rather give the money away than pay extra tax" then give it to charity.

[pr1]

If it's a case of "I'd rather give the money away than pay extra tax" then give it to charity.

next thread:

"What do I need to do to set up a registered charity?"

[WordIsBond]

Perhaps OP has a family member in need and is wondering if this is a way they can meet that need. The answer is probably yes, this can be done.

There is a whole lot of discussion in the guidelines to employment related securities which talks about gifting shares to family members, and that gifting shares to family members who are employees can be done if it is done because they are a family member, but if it is done because they are an employee then it incurs tax.

If my sister were suddenly widowed and needy and I wanted to give her some shares in BP, why shouldn't I? Similarly, if I wanted to give her some in MyCo, why not? There might be CGT ramifications and IHT as well if I pass from this benighted existence too soon afterwards, but there's nothing inappropriate about gifting shares, and family members do it all the time.

As someone said, if it is a parent and is likely to just come back as an inheritance having incurred less tax, they might look dimly on that. But if it is a parent who needs income and is going to be spending the money, there is no reason I have to give the money itself rather than an income-producing asset.

[TheCyclingProgrammer]

I'm not certain that the dividends not coming back is enough to say there is no retained interest. There could be an expectation of inheriting them back at some future point for example.

But, ignore that and assume the recipient has total use etc, this then improves their income position. This just might, under some circumstance, be an interest. e.g. it enable the aged parent to pay nursing home fees which were previously paid by the settlor.

No idea of any cases in the area; but if the tax take on the overall block of money reduces - which it could well if it were diverted to the parents by the gift of shares rather than the gift of post tax income I would expect HMRC may taker an interest.

I've not looked to see if the term interest is defined anywhere but I'm fairly certain it should be taken to mean legal interest, i.e. having either ownership or certain legal rights over a piece of property. To have an interest in something there needs to be some kind of legal title or right over the property.

This is why HMRC talk about gifts with strings attached. The example they give is giving a share to a brother with the agreement that the shares would later be gifted back which means the settlor still has interest in the shares as they are expected to come back to them. Worth noting that HMRC make no mention of their being an issue with the recipient being a family member in this example; interest is retained because there is a prior arrangement.

I see what you're getting at with the inheritance thing and it would be an interesting angle to take but I think if the dividends were being spent as regular income by the recipient then it would be hard to argue that there is any beneficial interest in the shares once given away.

Of course this is all hypothetical and nobody can ever give a definitive answer on this unless HMRC pursue a case like this and case law is established so on that basis of there is no genuine tax avoidance motivation then I wouldn't be too worried and even if there is I wouldn't be that worried either.

[ironman20]

I have been looking over the issue and have come to the conclusion that the gifting is not advised. I have family members that are dependent on me and so this was the reason. When said no interest in retaining the interest i meant the cash would go to their use, bills, upkeep etc I would expect not to have recourse to the cash later.