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Will passing shares through a discretionary trust avoid a capital gains tax charge?
A client and his wife own shares in a property investment company and would like to start gifting shares to their adult children as the first stage in their inheritance tax mitigation strategy.
The difficulty is that the value of the properties has risen significantly since they were originally acquired by the company so a considerable capital gain would trigger were they to simply gift the shares.
We are aware that the gift of an asset into a discretionary trust is immediately chargeable to inheritance tax and as long as the trust is not settlor-interested holdover relief should be available in relation to the resulting capital gain under TCGA 1992 s 260.
A thought therefore would be for the couple to transfer shares up to the value of the inheritance tax nil-rate band into a discretionary trust for their adult children’s benefit. This would at...
