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Where Taxpayers and Advisers Meet

IHT and CGT on unlisted shares

Matthew
Posts:10
Joined:Wed Jun 07, 2017 11:06 am
IHT and CGT on unlisted shares

Postby Matthew » Tue Nov 21, 2017 11:42 am

A & B are a married couple. Both own unlisted shares in a relative’s major transport and warehousing business, the shares having been gifted them many years ago. Neither A nor B have anything to do with the business.

(1) A dies leaving his/her shares to B. These shares are now in the wrong name. Does this require a solicitor to change the name? If so, is that something B pays for, or the firm? If B, any idea of what that might cost? £500? £500-£1000? £1000-£2000?

(2) I don’t think that, apart from any tax due on any recent dividends on those inherited shares, that there are any further tax implications. Is that right?

(3) Next B dies, leaving the shares to the surviving children. The shares need to be valued. Who pays for the valuation? If B’s estate pays, what might such a valuation cost? I imagine it might be a considerable figure.

(4) Once the shares have been valued there will be tax to pay. The shares have just passed from parent to children. Does just IHT apply, or both IHT and CGT? An explanation of how the tax calculations go would be helpful.

(5) Is it foolish to hang on to the shares until both partners have died?

(6) At present both partners are still alive in their 70s and there is a possibility of buying more shares. What are the pros and cons of buying more shares?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: IHT and CGT on unlisted shares

Postby bd6759 » Tue Nov 21, 2017 6:33 pm

1) No cost at all. Tell the company and ask them to issue a new share certificate.

2) Probably not.

3) A valuation will only be necessary if the estate is liable to IHT. The company accountant should be able give a view on their value, but he might charge for that service. The estate pays.

4) CGT is paid on disposals. Death is not treated as a disposal, so there is no CGT to pay. There may be IHT to pay if the total value of the estate exceeds the limit.

5) No.

6) The value of investments may go up or down and you may not get all of your money back.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT and CGT on unlisted shares

Postby maths » Tue Nov 21, 2017 6:51 pm

Is there any idea what A and B's shareholdings are currently worth?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT and CGT on unlisted shares

Postby maths » Tue Nov 21, 2017 6:55 pm

Seems to be a bit missing from my post. It should have also stated:

Have you been advised as to Business Property relief for IHT purposes?

Matthew
Posts:10
Joined:Wed Jun 07, 2017 11:06 am

Re: IHT and CGT on unlisted shares

Postby Matthew » Thu Nov 23, 2017 11:52 am

Is there any idea what A and B's shareholdings are currently worth?
Each has shareholdings valued at ~110K.

Have you been advised as to Business Property relief for IHT purposes?
I've not heard of 'Business Property relief' before. We don't have any part in the running of the business except in so far as we were gifted these shares by a close relative. If BPr is relevant, can you indicate how.
There may be IHT to pay if the total value of the estate exceeds the limit.
If I understand this correctly, the value of the shares (~110K) is taken as part of the estate?
And so (ignoring the nil rate band) there will be 40% tax to pay on 110K?


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