Can I gift 50% share of ltd co to wife?

[Fred Bloggs]

Issue new shares which she buys @ £1 each.

[Little'Old Me]

What would be the advantage to this?

Gifting her 50% of the shares means that you can both earn up to the 40% bracket off dividends.
I can't imagine this to be the same if you jointly owned the same shares, although I am not an accountant....

By adding your wifes name to your shares - you will own them Jointly. Its like having a joint bank account. The HMRC tends to view this as "you share" the shares equally, rather than an outright gift..... This also means you can share the dividends (in the same way as you would the share the interest of a joint savings account). So you can double the dividend payouts, as you split it the 50/50. The paperwork is easier (just complete a transfer form) too!

If something happens to one of you, the other gets the shares without the need to "inherit" and the company bank accounts are not frozen. (There is nothing to stop you from having the paperwork in place undated to "transfer the shares" back to one name should the law change about Income shifting etc. No Stamp Duty or tax implication for the transfers.... )

A few years ago, I had a client surviving on the money left in the Company until probate was granted, because all the other bank accounts were frozen when her husband (sole director) died in a Car Accident. The banks initially froze the companies Accounts, which you can image was stressful for her. As not only did she have to cope with 2 young children losing their father suddenly (they were in the car in which he was killed!) but she had no money to even buy food.

Fortunately 2 months earlier he agreed on my advice to put the companies shares in joint names. So I arranged the paperwork to remove his name from the shares, appointed her as director, removed him as director and informed the bank of the changes. They contacted her and gave her full access to the Company Bank accounts. If she had owned 50% of the shares instead of 100% jointly, the bank may not have been so helpful, and it may not have been so easy to do.

[chetanojha]

Hi Little'Old Me,

What is the difference between jointly owning shares and 50-50%(or49-51) share? I am planning to divide my share in 49-51 ration with my wife so she can be paid dividends too.

What is the best way of doing it? Does Section 660 regulation will not affect this setup?

Thanks

By adding your wifes name to your shares - you will own them Jointly. Its like having a joint bank account. The HMRC tends to view this as "you share" the shares equally, rather than an outright gift..... This also means you can share the dividends (in the same way as you would the share the interest of a joint savings account). So you can double the dividend payouts, as you split it the 50/50. The paperwork is easier (just complete a transfer form) too!

If something happens to one of you, the other gets the shares without the need to "inherit" and the company bank accounts are not frozen. (There is nothing to stop you from having the paperwork in place undated to "transfer the shares" back to one name should the law change about Income shifting etc. No Stamp Duty or tax implication for the transfers.... )

A few years ago, I had a client surviving on the money left in the Company until probate was granted, because all the other bank accounts were frozen when her husband (sole director) died in a Car Accident. The banks initially froze the companies Accounts, which you can image was stressful for her. As not only did she have to cope with 2 young children losing their father suddenly (they were in the car in which he was killed!) but she had no money to even buy food.

Fortunately 2 months earlier he agreed on my advice to put the companies shares in joint names. So I arranged the paperwork to remove his name from the shares, appointed her as director, removed him as director and informed the bank of the changes. They contacted her and gave her full access to the Company Bank accounts. If she had owned 50% of the shares instead of 100% jointly, the bank may not have been so helpful, and it may not have been so easy to do.