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

[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.

[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.

[Fred Bloggs]

Issue new shares which she buys @ £1 each.

[vetran]

AIUI if the shares have value then you can't easily gift them, best to do it at the start before you start earning money. If you already have established earnings then it may be more difficult.

[blacjac]

Thanks ASB this might be an avenue worth exploring then...

However I suspect if this is the case the income shifting legislation would apply equally as to gifting shares (if it ever comes in)

[ASB]

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....

You would need to check, but I beleive you should find that income from jointly owned investments is now split 50/50. You used to be able to make an election to get it treated biddfernlyt but I seem to think that is now gone.

[BigJake]

Good advice

Thanks chaps.

Fundamentally, that's great that the enemy doesn't have to provide 'consideration' for the shares.

I'll talk to the accountant to sort out the paperwork.

[blacjac]

Rather than "gifting" the 50% have you considered, owning the shares "jointly".

Just add her name to your shares? That way you aren't giving them away!

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....

[Little'Old Me]

Rather than "gifting" the 50% have you considered, owning the shares "jointly".

Just add her name to your shares? That way you aren't giving them away!

[Ardesco]

You may want to get her to pay a token fee for them however. If you don't and she starts getting large dividends all of a sudden HMRC may decide to start investigating.

I'm sure I heard of a story a while back where things like this were causing investigations and then the revenue was going after people for income shifting.

[blacjac]

Agreed, you sign the forms and keep them at head office, hold a minuted meeting board meeting to agree the transfer and then next time you do your companies annual return update the details heald at companies house to reflect the new share ownership.

Simples!

[sooty99]

No need for any money to be involved. Speak to your accountant. You both sign a couple of forms (for Companies House?) and all is done.

[BigJake]

Hi there,

If I am the sole shareholder of my ltd co. and I want to give 50% to my wife, does there need to be some kind of 'value' attached to her purchase of those shares, or can she buy them for a nominal value?

The co. has been trading 4 years, around the low 6 figure turnover each year.

Also, is there any stamp duty payable?

Hope that makes sense.

Thanks.