Reply to: Transfer Shares.

[Gonzo]

You are correct.

Bang goes that theory then

[THEPUMA]

Thanks for letting us know the outcome.

I am surprised - it runs counter to what I instinctively thought. I was sure that HMRC would want a valuation for all potentially CGT chargeable events, but if the accountant says not who am I to argue.

I guess that this is the one exception to me always being right that proves the rule

You are correct. In order to avoid the possibility of a CGT charge, a holdover election should be signed by both parties and submitted to the donor's tax district.

Having said that, unless the value of the share exceeds £9,201 the gain would fall within the donor's annual CGT annual exemption (assuming it hasn't been utilised elsewhere).

[Gonzo]

All sorted now. Accountant has sent me a stock transfer form all filled in basically stating Rachel will transfer her share to me for the cost of £1. Just need to let Companies House know at the end of the year.

Thanks for letting us know the outcome.

I am surprised - it runs counter to what I instinctively thought. I was sure that HMRC would want a valuation for all potentially CGT chargeable events, but if the accountant says not who am I to argue.

I guess that this is the one exception to me always being right that proves the rule

[lnoton]

Both of you working for the same limited company will have absolutely no effect on your IR35 status. I would echo what others have said do not give her half of your company. It is a very a bad idea if things go wrong. She does not have to work for your Ltd Co to be able to substitute for you.



100% caught as "income shifting" (Don't you love these new phrases Nu Liemore makes up....). If HMRC investigate they will be able to trace the money going straight to you through her bank account, the new (utter bollocks) legislation coming into effect in April will catch you.

All sorted now. Accountant has sent me a stock transfer form all filled in basically stating Rachel will transfer her share to me for the cost of £1. Just need to let Companies House know at the end of the year.

[Ardesco]

Well no i didnt, plus id already set up the company when we spoke last time.
As i said she is going to go contracting in the near future, and as we both work in IT, we can claim subsitution and all sorts easily to prove we are out side IR35, which we are anyway.

Both of you working for the same limited company will have absolutely no effect on your IR35 status. I would echo what others have said do not give her half of your company. It is a very a bad idea if things go wrong. She does not have to work for your Ltd Co to be able to substitute for you.

Im sure i've had this advice from you before..

I've traded for a month and we are going to be declaring dividends monthly, all of hers will go straight from her to me minus the tax she has to pay when she does her tax return.

100% caught as "income shifting" (Don't you love these new phrases Nu Liemore makes up....). If HMRC investigate they will be able to trace the money going straight to you through her bank account, the new (utter bollocks) legislation coming into effect in April will catch you.

[Gonzo]

Why not?

The shares are worth what the market will pay for them.

Just write up a document saying 'sale of share from Joe Bloggs to Josephine Jones, £1'

That's it.

Not complex.

And fill it in on Year End Return.

There's no market value for these shares so that concept does not apply here.

I am no expert on this granted, but I do not think that it is OK to arbitrarily assign a notional value to a potentially taxable event. That value will need to be backed up to HMRC otherwise they might take the view that the shares have been valued at £1 to stiff them out of some tax.

[weemster]

Get expert advice from an accountant - if you don't have one get one. Transfer of co. shares is a potential IR pointer to a knock at the door.

[ASB]

Ok, the dividends come back to you so you have a number of options:-

1) Get her to sign a dividend waiver. Doesn't actually achieve you ownership she she will still have rights on the retained.

2) Get here to sell the share to you at market price - whatever that may be. In theory you need to justify the price paid other wise it is a gift of the difference.

3) Just get her to gift it to you. Record the transfer in the shareholders register and do the necessary with a stock transfer form.

In the case of 3 it is a potentially exempt transfer for inheritence tax. Thee are implications for her estate from an IHT view should she dies in the next seven years. [The likely impact is probably nil]. You can make gifts of anything to anybody broadly without tax consequences except on death within 7 years. If the value is less than 3k (and I imagine it is) then you could probably cliam it is covered by the specific gifts IHT exemption anyway.

[ASB]

Works out the same.....

1% NI + 40% IT = 41%
versus 21% CT + 22.5% IT = 40.75%


What about employers NI.

[lnoton]

If she is a higher rate tax payer and you were going to do this then why? You might as well take the higher rate hit yourself. I am not sure but if you do it that way then Hector might want to tax you on it again as it could be classed as income for you.

Not 100% sure on that though.

And you clearly didn't listen to my advice last time did you

Well no i didnt, plus id already set up the company when we spoke last time.
As i said she is going to go contracting in the near future, and as we both work in IT, we can claim subsitution and all sorts easily to prove we are out side IR35, which we are anyway.

[Sockpuppet]

all of hers will go straight from her to me minus the tax she has to pay when she does her tax return.

If she is a higher rate tax payer and you were going to do this then why? You might as well take the higher rate hit yourself. I am not sure but if you do it that way then Hector might want to tax you on it again as it could be classed as income for you.

Not 100% sure on that though.

And you clearly didn't listen to my advice last time did you

[dude69]

You need to be careful. The shares were worth £1 when the company was created, but if your company has been trading and making money I don't think that those shares would still be valued at £1.

Why not?

The shares are worth what the market will pay for them.

Just write up a document saying 'sale of share from Joe Bloggs to Josephine Jones, £1'

That's it.

Not complex.

And fill it in on Year End Return.

[dude69]

You should have paid the company £1 each for the share. This £2 then goes into Shareholders funds on the balance sheet.

By giving her some dividends however you could be seen to be income shifting - something which HMRC are going after big time. Unless she earns revenue for the company then she needs to give up the share. Driving you to the station won't be seen as revenue generation. Also being the company Sec doesn't cut it as dividend worthy either.

You could make her an employee and pay her 40p/mile for all business mileage that she does. E.g. driving you to the station. However if she combines this with her own commute then you need to check the HMRC guidance on if you can claim this. Depends how many extra miles she does if it is a significant detour.

Unless its completely in the opposite direction I would say that you can't do that.

Also if she is a higher rate tax payer I am sure that dividends are worse than just taking plain PAYE due to 20% (CT) and 22.5% (income tax). I've not done the sums but I wouldn't say it would be much different.

Works out the same.....

1% NI + 40% IT = 41%
versus 21% CT + 22.5% IT = 40.75%

[lnoton]

Don't give her dividends. I know there is no tax advantage to doing it but HMRC will still likley fine you.

Also get her to contract through her own Ltd. You're not married and even if you were it would be a bad idea.

Business and personal lives should be kept seperate.

If she had one share she has 50% of the company. So if you earn different amounts and wind the company up you both get half of whats left.

Also don't think "we'll never break up it won't happen to us". If you're that sure of it propose to her as soon as you read this. It can, will and has happened to lots of people before you.

She is only your GF nothing more, giving her half of the company is a seriously bad idea. Mixing business and personal lives is also another serious bad idea.


Sockpuppet (a.k.a CUK Love Grinch) - its near Feb 14th. Grumpy this time of year, lots of work to do.

Im sure i've had this advice from you before..

I've traded for a month and we are going to be declaring dividends monthly, all of hers will go straight from her to me minus the tax she has to pay when she does her tax return.

I just want to transfer the share...which is why i started this thread. This will be useful for many others that will be seeking to do the same come April when they all need to transfer their wives shares back to them.

Hopefully my accountant will get back to me on Monday.

[Sockpuppet]

Don't give her dividends. I know there is no tax advantage to doing it but HMRC will still likley fine you.

Also get her to contract through her own Ltd. You're not married and even if you were it would be a bad idea.

Business and personal lives should be kept seperate.

If she had one share she has 50% of the company. So if you earn different amounts and wind the company up you both get half of whats left.

Also don't think "we'll never break up it won't happen to us". If you're that sure of it propose to her as soon as you read this. It can, will and has happened to lots of people before you.

She is only your GF nothing more, giving her half of the company is a seriously bad idea. Mixing business and personal lives is also another serious bad idea.


Sockpuppet (a.k.a CUK Love Grinch) - its near Feb 14th. Grumpy this time of year, lots of work to do.