Readers' forum : New alphabet shares

We act for a profitable trading family company where the share capital of a nominal £100 is held equally by husband and wife as A and B shares. The company has accumulated reserves and pays substantial dividends which are expected to continue to increase.

The clients have two children approaching 18 and they are likely to go to university. The children do not work for the company at present. A gift of shares from the parents to the children to enable them to receive a share of the dividends would attract a substantial capital gain which could be held over by election.

Alternatively we are thinking of creating further alphabet shares and allotting 5% of the share capital as C and D shares to the two children at par value. The parents would waive their entitlement to subscribe for these shares. Once the children have reached 18...