Readers’ forum: Company shares

I have a client who owns 50% of a limited company which is a property investment business.

The client has asked if he could loan his shares in the company to either his adult children or a company owned by his children. Is such a loan possible? If it is possible how would dividends paid on the shares be treated after the loan?

Would it be income belonging to the children/their company and would this be seen as a further loan or gift by the parent?

Query 19 728 – Len.

The loan of shares to children would be a settlement.

Unless there are any conditions attaching to the shares I suppose there is nothing in principle to prevent the client loaning them to his children or a company owned by them.

The question is what they are seeking to accomplish by doing this. Are the children...