Tied myself up in knots here. Grandmother is a director and >5% shareholder of unlisted (family owned) company. She wishes to gift her shares to a bare trust (express trust from written declaration of trust) with her grandson (a minor) as sole beneficiary (and, by default, herself as trustee).
As I understand it, a CGT liability arises as there is a transfer of beneficial ownership. Grandmother, I believe, qualifies for hold over relief on CGT so wishes to establish the claim with HMRC.
(1) Is CGT liability seen as transferring to the trust or the beneficiary at this point?
(2) On HMRC CGT holdover relief claim form, who/what is to be listed as transferee? Is it to be the grandson as the new beneficiary, who is a minor, or the unnamed bare trust? A valuation of the gift is required which would normally require an agreement of a sensible value between transferor and transferee, with signatures. So what happens with that when the trustee is the transferor and the transferee is the trust (where beneficiary is a minor)?
(3) Is this a valid procedure? If not, what should grandmother be doing?
(4) Am I right in assuming that, for IHT purposes, the shares leave grandmother's estate at the time this bare trust is established (and usual 7yr rule applies from then)?
Thank you.
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