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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4433
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I own 30% of the shares in a limited company in its first full

Customer Question

I own 30% of the shares in a limited company in its first full year of trading. At the end of the first year the company will have books showing a loss of approx. £100,000 due to a loan taken for setting up. It will have turned over approx. £350,000 with a gross profit of approx. £150,000. The business will be profitable and pay back the loan (over the next two years).

I would like to transfer my shares to my three children. Will there be any tax implications? I have no idea how one would value the shares in the company as it is in a negative position and has been since set-up. Can one work on the nominal value of the shares. Needless to say no dividends have ever been paid on these shares and none is planned in the near future.
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

 

The gift of shares to your children could have inheritance tax and capital gains tax implications. The valuation of the company is specialist work and (probably) unless the company is listed will be challenged by the Inland Revenue District Valuer anyway. You can get a post transaction valuation check done by HMRC to avoid a later tax return inquiry.

 

The gifts of shares to your son and daughter would be treated as disposals at market value - which as has been mentioned will need to be agreed with HMRC. Your accountant may be able to do a rough and ready valuation and apply for a post transaction valuation check.

 

I am sure this would help...

Warm Regards,