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bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am starting a private limited company. My mother and

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I am starting a private limited company. My mother and partner will have some shares. Will they be able to sell or give their shares to me at a later date without paying any tax on the gift or sale?

Hello, I am one of the experts on Just Answer and pleased to be bale to help you with your question.

No, they will be liable to Capital Gains Tax (CGT) on the gain made at disposal at 10% or 20% or a combination of the two rates depending on their income including the gain in the relevant tax year. The each have a non cumulative Annual Exempt Amount (AEA), currently 11.7K, to offset any gain.

I hope that you have found my reply of assistance.

Customer: replied 1 month ago.
Thanks - how would the value of the shares, and the gain be calculated? This would be a limited company for an IT contract earning about 150k/year

Some years ago I attended a seminar by a well known experts on the subject of the valuation of unquoted companies. His sage opening words were that an unlisted company is only worth what someone is prepared to pay for it! The seminar then went on to explain valuation methods and in your case this would be based on the income flow less expenses on a Years Purchase (YP) basis. Inevitably, in the event of disposal by gift, the donor will be in for an argy bargy with HMRC!

I am sure that you will appreciate that at this stage no clear position can be determined as even the quantum of YP is a Tom Tiddler's Ground for dispute, so back to the lecturer's original statement!

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