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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I inherited some shares about 25 years ago and plan to give

Resolved Question:

I inherited some shares about 25 years ago and plan to give them to my three children. The total value (today) is around £75K. Be glad if you could tell me the CG implications. The transfer can be spread over more than one tax year.
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

Can you tell me if the shares you plan to give away are in a publicly quoted company with which you have no connection or a private company that you and your children are involved with please. Do you know what the shares were worth when you inherited them?

Customer: replied 3 years ago.

The shares are in Unilever, Rio Tinto and BAT. I inherited them from my mother who died in 1978. I don't know what they were worth then - I expect there is a table somewhere.

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.
Hi again.

If you gift the shares to your children, you will be treated as having "sold" them at their open market value and you may have Capital Gains Tax to pay. The gain on each holding will be computed by deducting the cost of the shares, ie their value when you inherited them, from their value on the day you give them away. You would need to take account of additions to and reductions in the shareholdings since you inherited them.

In 2013/14, the first £10,900 of gains an individual makes are exempt from CGT. In 2014/15, the CGT exemption will be £11,000.

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you make gains in excess of the annual CGT exemption.

In addition to the CGT implications, you will also be treated as having made gifts to your children for Inheritance Tax purposes. So long as you live for at least seven years after each gift, its value will not be included in your estate for IHT purposes. Otherwise, it will.

I hope this helps but let me know if you have any further questions.
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