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bigduckontax, Accountant
Category: Tax
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myself and my wife own shares and are directors in our (Limited

Customer Question

myself and my wife own shares and are directors in our (Limited Company) family business, we are now nearing retirement.My two sons now run the business and are shareholder /directors.
Question . Will you confirm that in the event of death shares can/will pass to my sons without inheritance tax on their value.
Question . can I transfer some or all of our shares to my sons without inheritance/gigt tax liability.
thank you
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
I am Keith and happy to help you with your taxation queries. The news I bring however, is not good and you must always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.
The shares will only pass to the sons if the deceaseds' wills so provide.
They will pass without Inheritance Tax (IT), but before that can happen the parents whole estate including the value of the shares will be assessed for IT each separately and any surplus over 325K (plus inter spousal and charitable bequests) taxed at a flat rate of 40%. There is a possibility of the surviving spouse utilising any unused IT allowance of 325K of the other on the demise of the last parent. You will appreciate that bequests can only be made from the parent's net estate after IT and to pay the IT shares may have to be sold by the executors.
Yes, you can transfer shares to your sons. Such a gift is a Potentially Exempt Transfer (PET) for IT purposes. PETs run off at a taper over 7 years from the time of the gift and are added back to the estate if death occurs within that period. These PETs are the first to suffer IT and if the estate cannot meet the IT then it cascades down to the beneficiaries for immediate payment.
I do hope I have shed some light on your situation.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your excellent support.

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