A gift of shares to your children is a disposal at market value for capital gains tax, even though no money changes hands. If the children work in the business, the same gift can also be caught by the employment-related securities rules. And the inheritance tax answer changed in April 2026. None of these problems is difficult on its own. The cost comes from solving one of them in a way that quietly breaks another.

That sequencing is the work. We map the current position, compare the routes with numbers attached, and deliver a step plan your solicitor and accountant can execute from directly.

What we do

The moving parts

• Capital gains tax: A gift to a connected person is treated as a sale at market value, so a paper gain arises with no cash behind it. For a trading company, a joint holdover election under s.165 TCGA 1992 can be made to defer that charge by rolling the gain into the recipient's base cost. Whether you should hold over is a different question: deferral strips the next generation's base cost, and sometimes crystallising the gain now, at the 18 per cent BADR rate on a minority-discounted value, is cheaper over the life of the shares than a deferral that compounds the problem. We run both routes with numbers before recommending either.
• Employment taxes: If the recipient works in the business, shares acquired at undervalue can be taxed as employment income. HMRC's own guidance accepts that a genuine family gift normally sits outside this charge, but the exception has conditions: the gift must be personal rather than a company share issue, the recipient should be on a commercial salary, and the family intent should be documented by deed.
  
• Inheritance tax: A lifetime gift starts the seven-year clock, and Business Property Relief still shelters trading company shares, but from April 2026 the 100 per cent relief is capped. For owners whose company is worth more than the cap, the timing and structure of lifetime giving now matters in a way it did not before.
  
• Control: Most parents want to pass value before they pass control, and this is where plans most often break silently. Give the next generation their value in non-voting shares and the holding can fail the voting test for BADR, so the relief is lost on a future sale even though they own most of the company. The fixes are simple if designed in: a small parcel of voting shares alongside, or conversion rights exercised at least two years before any sale. Simple, but only if someone checks.

Case study

A consultancy owner bringing his family into ownership

The founder of a specialist consultancy wanted his wife and daughter to hold equity while he kept control of the business he had built.

We delivered a fixed-fee advisory note: a valuation approach for the transfer, the employment-related securities analysis for a family member working in the business, a comparison of outright gift against growth shares with the tax cost of each, a tax review of the proposed Articles changes, election templates and a sequenced step plan flagging the material risks and the alternative routes. His own solicitor implemented from the note.

One finding justified the fee on its own: the draft plan passed the family's value through non-voting shares. Left alone, that could have quietly destroyed Business Asset Disposal Relief on any future sale. One design change fixed it before a single share moved.

FAQ