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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have run a small business for 50 years and employ my son.

Resolved Question:

I have run a small business for 50 years and employ my son.
If I give to my son a small percentage of the business to make him a partner does CGT arise and how will it effect my assets when I die.
Regards
Ray
Submitted: 8 months ago.
Category: Tax
Expert:  TonyTax replied 8 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 8 months ago.

Is your business run as a sole trader with your intention being to make your son a partner or is it run through a limited company with your intention being to give him some of your shares in the company?

Customer: replied 8 months ago.
The company is me as a sole trader, and I thought to give a small percentage to my son with a view to makeing probate less of a problem if/when I die.
Expert:  TonyTax replied 8 months ago.

Thanks.

Leave this with me while I drat my answer. It will take a while so please bear with me.

Expert:  TonyTax replied 8 months ago.

If you gift a share of your business to your son, that may give rise to a capital gain so you would need to have your business valued to determine that. If the gain is no more than £11,000, then it will be covered by the annual CGT exemption. You could claim entrepreneurs' relief which would restrict any CGT charge to 10% of the post CGT exemption gain. Take a look here for information on entrepreneurs' relief.

Alternatively, you could make a claim for holdover relief jointly with your son, thereby transferring the gain to your son by reducing the base "cost" of his share of the business which might come to fruition if and when he sells his share of the business. Take a look here for more information on holdover relief. You would use this option if the gain was of a size where the tax liability may be too high to afford.

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

Customer: replied 8 months ago.
Thank you for your advice.
Can I give to my son £11,000 as a small part of the business each year.?
I would like him to be a partner.Best regardsRaphael
Expert:  TonyTax replied 8 months ago.

Yes, you can do that. Believe it or not people do that with property and its all perfectly legal.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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