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Where Taxpayers and Advisers Meet

EIS unquoted shares

leighc
Posts:29
Joined:Wed Aug 06, 2008 3:26 pm

Postby leighc » Sat Jun 28, 2008 1:10 pm

My mother has recently died leaving some unquoted shares. I know these were purchased under the EIS scheme over five years ago. I believe the EIS sheme had some tax advantages but does this include exemption from IHT? I understand that certain unquoted shares - AIM? - are not liable to IHT but how do I find out if my mother's shares fall into this category?
Thanks in advance for your advice.

TN
Posts:297
Joined:Wed Aug 06, 2008 4:09 pm

Postby TN » Sun Jun 29, 2008 1:25 pm

Unquotes shares in a trading company should qualify in whole or in part for Business Property Relief at 100% - effectively meaning that they are IHT free. There are other conditions for them to qualify - e.g. must have been owned for 2 years prior to the death, no binding contract for sale etc. Your solicitor should be able to establish whether you qualify. Look out for any pre-emption rights over the shares.

leighc
Posts:29
Joined:Wed Aug 06, 2008 3:26 pm

Postby leighc » Wed Jul 02, 2008 1:15 pm

Belated thank you TN. I am not using a solicitor for probate so is there anywhere I can check myself to confirm whether or not the shares qualify? (They have definitely been owned for longer than 2 years.) Forgive my ignorance but what are pre-emption rights?
Thank you again for your reply.

TN
Posts:297
Joined:Wed Aug 06, 2008 4:09 pm

Postby TN » Wed Jul 02, 2008 10:45 pm

You could ask the company to see whether they have had a review. Other than that you can either pay for a review or, if you believe it will qualify, complete the probate forms on the basis it does and wait for an enquiry from HMRC.

Pre-emption rights and right for other shareholders to buy the shares of a deceased shareholder. This gives security that the control of the company won't be lost. However, if there is a binding contract for sale at the time of death then the BPR is not allowed. You need to check whether the pre-emption rights (if any) are a binding contract for sale.

leighc
Posts:29
Joined:Wed Aug 06, 2008 3:26 pm

Postby leighc » Thu Jul 03, 2008 6:32 am

Thanks again TN. I will go for the BPR. I am certain pre-emption rights are not an issue (now that I know what they are!)


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