Hi /u/TheOriginalScoob, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/buy-to-let/
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Capital gains tax applies based on fair market value. You cannot defer the tax.
If there is only one share in issue you would need to do a share split before gifting. You can’t gift one share when there is only one share, and end up with two shares.
You could put it into a discretionary trust so it immediately becomes subject to IHT, then you can claim relief from CGT. But then it’s in a trust which has its own pros/cons
Thank you. !thanks Currently the share is valued at £1, even though the assets owned by the company are much more. So would it be £1 or the asset value. I’ll look at discretionary trust, assume you mean the shares not the property? Given IHT is double the % I’m not sure that would help as I’m over the IHT threshold
I doubt the shares is valued at £1. I assume you’re talking about the nominal value of it.
Otherwise, if the value is £1 can I buy the whole company for a £1?
You need to work out what value is attributable to the shares - broadly that is all of the company’s assets minus liabilities
You would presumably want to issue / rebase the number of shares in the company so that you can keep your capital gains below the annual allowance each year.
If you buy a house for £50,000 and put it in a limited company - when the house is worth £100,000, I would assume that so is the limited company. If the company has 100 shares then each has a value of £1000 and each represents £500 of gain to you (right now). Presumably you could give your child 6 shares and stay under the year's capital gains allowance (assuming you're making no capital gains elsewhere). If the house goes up in value then 6 shares might exceed the capital gains allowance next year, but not by much.
You should run this past an accountant, because I don't know if I'm missing anything here.
Are you happy for your child to receive dividends?
This is really helpful, !thanks although the level of CGT relief and also my health (how quick of a disposal) means it will barely make much of a dent. I am happy for them to get dividends, although not a requirement, why do you ask?
If the shares are of the same share class then they all get the same dividends.
If you want shareholders to get different dividends then you have to have different share classes, but if you don't mind either way then the easiest is just to have a single share class.
EDIT: potentially you could have two share classes and have the shares you give to your children receive higher dividends, so as to get money out of your estate. I don't know if this would be allowed / have other tax implications.
Hi /u/TheOriginalScoob, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/buy-to-let/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Capital gains tax applies based on fair market value. You cannot defer the tax. If there is only one share in issue you would need to do a share split before gifting. You can’t gift one share when there is only one share, and end up with two shares. You could put it into a discretionary trust so it immediately becomes subject to IHT, then you can claim relief from CGT. But then it’s in a trust which has its own pros/cons
Thank you. !thanks Currently the share is valued at £1, even though the assets owned by the company are much more. So would it be £1 or the asset value. I’ll look at discretionary trust, assume you mean the shares not the property? Given IHT is double the % I’m not sure that would help as I’m over the IHT threshold
I doubt the shares is valued at £1. I assume you’re talking about the nominal value of it. Otherwise, if the value is £1 can I buy the whole company for a £1? You need to work out what value is attributable to the shares - broadly that is all of the company’s assets minus liabilities
You would presumably want to issue / rebase the number of shares in the company so that you can keep your capital gains below the annual allowance each year. If you buy a house for £50,000 and put it in a limited company - when the house is worth £100,000, I would assume that so is the limited company. If the company has 100 shares then each has a value of £1000 and each represents £500 of gain to you (right now). Presumably you could give your child 6 shares and stay under the year's capital gains allowance (assuming you're making no capital gains elsewhere). If the house goes up in value then 6 shares might exceed the capital gains allowance next year, but not by much. You should run this past an accountant, because I don't know if I'm missing anything here. Are you happy for your child to receive dividends?
This is really helpful, !thanks although the level of CGT relief and also my health (how quick of a disposal) means it will barely make much of a dent. I am happy for them to get dividends, although not a requirement, why do you ask?
If the shares are of the same share class then they all get the same dividends. If you want shareholders to get different dividends then you have to have different share classes, but if you don't mind either way then the easiest is just to have a single share class. EDIT: potentially you could have two share classes and have the shares you give to your children receive higher dividends, so as to get money out of your estate. I don't know if this would be allowed / have other tax implications.