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Share plan

24 March 2009
Issue: 4199 / Categories: Forum & Feedback , Income Tax
A company director employs her son as the company’s only other employee. Would it be possible to save tax and NI liabilities if shares were issued to the son and he were paid dividends instead of a salary?

I act for a limited company that consists of a director who owns all of the share capital.

Her son is the only other employee and he currently receives a salary of £35 000 per annum.

Rather than pay her son a salary the mother would like to give him shares in the company in order that the company may then pay him dividends.

However she does not want to relinquish control of the company.

I have suggested changing the share structure of the company by creating ‘A’ shares and ‘B’ shares. The ‘B’ shares will be non-voting shares and will be issued to the son.

What if any are the capital gains tax implications?

I am concerned that the mother will be gifting these shares and I may have to elect for gift relief.

Should I obtain a valuation of the company?...

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