Surgical approach

Our client owns 100% of the shares in a trading company that manufactures surgical products and has developed its patents. Income is expected to increase soon as a result.

Our client is aged 80 in good health unmarried with adult children. He wishes to realise the value of the patents including the anticipated increase in royalties and licensing income in the most tax-efficient manner. This will be after gifting a proportion of his shares to his sons and electing to hold over the gain. We have in mind two options.

First sell the shares in the company 12 months after the gift of shares to the sons. The company has traded for many years and investment activity is minimal.

Entrepreneurs’ relief should therefore apply although any entitlement to future income from the patents would be lost. Alternatively form a subsidiary (NewCo) and grant...