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Readers' forum : Issued at par

31 January 2017
Issue: 4585 / Categories: Forum & Feedback

Will the issue of alphabet shares to children be treated as a gift by parents?

Our client is a medical practitioner who operates his private practice through a limited company in which the shares are held by himself and his wife. He holds 50 A shares and his wife has 50 B shares. The wife draws the major part of the dividend income because the husband has a substantial salary from the National Health Service. The net assets of the company are about £40 000.

Recently a total of 50 C and D shares were subscribed for at par by their two infant children from their own savings created from non-parental gifts. The intention is that the minor children will be able to receive future dividends in their own right without this being aggregated with their parents’ income.

Do Taxation readers consider that there has been an element of gift from the parents that will invoke the settlement legislation resulting in the apportionment of the...

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