Restructuring share structure of an LTD

[TheCyclingProgrammer]

So you intend to effectively gift your parents £5k each year?

I don't think it's necessarily caught by s624 of the settlements legislation as you need to retain an interest in the shares or any derived income for that to be the case, but it would certainly raise some flags.

[fidot]

>> The idea is to myself to hold 51 shares, my wife 24 A, my mother 12 B and my father 12 C.

Who gets the other share?

[malvolio]

So you intend to effectively gift your parents £5k each year?

I don't think it's necessarily caught by s624 of the settlements legislation as you need to retain an interest in the shares or any derived income for that to be the case, but it would certainly raise some flags.

What the legislation says, in effect, is that immediate family members other than your spouse are "connected persons" for the purposes of the law. Ergo, you will have an interest in the shares and associated dividends.

[northernladuk]

>> The idea is to myself to hold 51 shares, my wife 24 A, my mother 12 B and my father 12 C.

Who gets the other share?

Excellent spot

[SlipTheJab]

>> The idea is to myself to hold 51 shares, my wife 24 A, my mother 12 B and my father 12 C.

Who gets the other share?

His Cat HTH.

[minstrel]

What if the OP sold some of his shares to his parents based on an independent valuation of the company?

Would this make a difference?

This potentially avoids it being treated as a settlement and could be good for IHT and CGT planning.

[northernladuk]

What if the OP sold some of his shares to his parents based on an independent valuation of the company?

Would this make a difference?

This potentially avoids it being treated as a settlement and could be good for IHT and CGT planning.

But you are just giving money away to your parents. How can that be good tax planning? Not a good idea getting your parents involved in your LTD.

[minstrel]

But you are just giving money away to your parents. How can that be good tax planning? Not a good idea getting your parents involved in your LTD.

This depends on your individual circumstances and your relationship with your parents, but I see two ways of looking at it:

1. Your parents gave you a lot of financial support over the years bringing you up and maybe helping out with uni fees or deposit for a house. Whilst you may not personally be better off transferring the shares, the family as a whole might be better off. And do you really want to be sitting on a £100k+ income and watch your parents struggle on a state pension?

2. Your marginal tax rate on a £100k+ contractor income is potentially around 46%. Why not make use of your parents' lower tax rates? Ultimately, the money is probably all coming back to you via inheritance anyway.

I wonder how many millionaire businessmen there are out there that don't involve their family to some extent in their tax planning.

[RonBW]

Ultimately, the money is probably all coming back to you via inheritance anyway.

That's assuming that you are the sole beneficiary of their will. I know my parents leave everything to me, my brother and my sister, plus a number of charities and also to the grandchildren.

It might work in some cases but I'd guess that in the vast majority it won't.

[northernladuk]

That's assuming that you are the sole beneficiary of their will. I know my parents leave everything to me, my brother and my sister, plus a number of charities and also to the grandchildren.

It might work in some cases but I'd guess that in the vast majority it won't.

And I would have said exactly the same.