Three daughters

Our client has state and occupational pensions totalling £50 000 a year and also runs a small limited company that operates a consultancy business.

His wife owned 100% of the issued share capital before she died earlier this year and up to that point she had extracted dividends from the company.

In her will the wife left 40% of the shares to her husband who continues to operate the company and the other 60% equally between her three adult daughters.

Given that none of these daughters has any input into the business on a day-to-day basis what will be the taxation implications of continuing to pay them dividends on the shares which have been willed to them by their late mother?

I look forward to readers’ thoughts on this matter.

Query 18 113 – Agamemnon

Reply from Cello Boy

Unlike remuneration (salary benefits...