Gift of quoted shares

NotesQuiz

If you give away shares as a gift

You will have to pay Capital gains tax on it

Step by step approach:

  1. Step 1
    Value the shares using:

    (Lower quoted price + Higher quoted price)/2

    Note: the share valuation rules are different for IHT so be careful not to confuse them.

  2. Step 2
    Calculate Disposal proceeds 
    = Number of shares given * value per share (step 1)

Illustration:

Megha gifted 1,000 shares in N plc when they were quoted at 400-408 pence per share, with marked bargains on that day of 398p, 402p, and 407p.

  • Calculate the value to be used for capital gains disposal proceeds.

Solution:

  1. Step 1 - Value the shares
    (400+408)/2 = 404

    Note: the marked bargains are not relevant for CGT life gifts but they would be relevant for IHT

  2. Step 2 - Calculate Disposal proceeds

    = Number of shares given * value per share (step 1)
    = 1,000 shares *£4.04 = £4,040

NotesQuiz