Transfer of shares between Spouses

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amir
amir Registered Posts: 21 New contributor 🐸
in Tax
my clients who are husband and wife and business is a limited company. They have ended their relationship and husband has acquired wife's shares for more than face value (£1 per share) in return for the wife to resign from directorship and relinquish her interest in the company. Part of the deal is that share consideration to be paid in 5 equal annual installments from 2018 through to 2022. every single payment is less than annual exemption. I know there are no capital gain tax implications between spouses but the scenario here is slightly different. this is a separation case and also transfer is not a gift but in fact for a consideration more than it's face value. My questions therefore are:
What are capital Gain Tax implications to wife, if any?
will this transfer of shares be treated on receipt or accrual basis? because if we treat on receipt basis then the sum is being received in 5 yearly installments and every installment is less than annual exemption.

can anybody help, please??

Comments

  • fournaanjez
    fournaanjez Registered Posts: 32
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    If the husband and wife are separated/not living together, the spousal exemption doesn't apply even if on paper they are still married.

    As far as I am aware, the total consideration would all be taxable in the year the shares are disposed of.

    So in that case yes there would be CGT implications for the wife, being the chargeable gain on the disposal of the shares as they do not receive the spouse exemption. They might be subject to entrepreneurs relief though.
  • amir
    amir Registered Posts: 21 New contributor 🐸
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    Thank You @fournaanjez

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