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Where Taxpayers and Advisers Meet

Gifting Shares?

Posts: 154
Joined: Wed Aug 06, 2008 3:41 pm

Gifting Shares?

Postby okevin » Thu Nov 06, 2008 11:27 am


If I own 100% of my company which is a trading company and wish to give half of my shares to a member of staff basically because he is due them based upon his efforts over the last few years.

He has been involved as much as me in the business and we are just now officially "sorting out" the share split.

I understand that this is a disposal by me and a gain will arise, and we can both elect to claim gift relief for CGT.

However how does this tie in with the employment related securities legislation.

Is this considered to be a transfer of benefit by way of employment? If it was, is it taxable to PAYE? If so is the tax when shares granted or when he sells them?

Many thanks

Posts: 200
Joined: Wed Aug 06, 2008 2:18 pm

Re: Gifting Shares?

Postby JSK TAXATION » Thu Nov 06, 2008 1:17 pm


As you correctly allude to in the question, where shares or other securities are acquired by reason of employment for less than their market value, then there will normally be a general earnings charge on the money’s worth of those securities, less anything paid for them. The legislation for this is contained at S446Q ITEPA 2003 et seq.

There are situations where these rules will not apply, but essentially they arise where the company is employee controlled or where the shares are not considered ERS. The latter being where the right to acquire the shares at under value does not arise by virtue of the acquirer's employment.

This transaction should be structured correctly to ensure it is fit for furpose and if you would like help in achieving that then please let me know. Kind regards.
John S King
Chartered Tax Adviser
01732 897850

Posts: 154
Joined: Wed Aug 06, 2008 3:41 pm

Re: Gifting Shares?

Postby okevin » Thu Nov 06, 2008 3:39 pm

Thanks JSK.

Does it make a difference that the gift of the shares will be from me and not from the company?

The company is not making any transfer of value?


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