(b) Providing financial assistance to Josh – alternative strategies
(ii) Gift of shares in Far Ltd
CGT liabilities for Maia
Maia’s gift of the shares would be treated as a sale at market value for the purpose of calculating the chargeable gain.
Gift relief would be available because Far Ltd is an unquoted trading company.
£ | £ | |
---|---|---|
Proceeds at market value | 420,000 | |
Less: cost | ||
Market value on 1 November 2018 | 375,000 | |
Less: gift relief in respect of earlier gift | (140,000) | |
–––––––– | ||
(235,000) | ||
–––––––– | ||
185,000 | ||
Less: gift relief (£185,000 x 84% (100% – 16%)) | (155,400) | |
–––––––– | ||
Chargeable gain | 29,600 | |
–––––––– |
Entrepreneurs’ relief would not be available, regardless of whether or not Maia works for Far Ltd, because Maia will not have owned the shares for one year on 1 July 2019. Accordingly, as Maia is a higher rate taxpayer, her CGT liability would be £5,920 (£29,600 x 20%).
IHT implications for Maia and Josh
Business property relief would not be available because Maia will not have owned the shares for two years on 1 July 2019. Accordingly, the IHT implications would be the same as for the gift of the investment property, where it is not furnished holiday accommodation, as set out above.