Can I give company shares to a family member?

Yes. You can give shares in a UK limited company to a spouse, civil partner, child or another family member, provided the transfer complies with the company’s articles of association and any shareholders’ agreement.

Although no money changes hands, a share gift can create Capital Gains Tax, Inheritance Tax and other tax consequences.

Check the Company’s Articles

Before gifting shares, review the articles for:

• Restrictions on share transfers
• Pre-emption rights
• Rights of first refusal
• Director-approval requirements
• Restrictions on transfers to children
• Compulsory-transfer provisions
• Different rules for particular share classes

A shareholders’ agreement may contain additional restrictions.

Family transfers are not automatically exempt from these rules.

How Do I Gift Existing Shares?

The usual process is:

1. Review the articles and shareholders’ agreement.
2. Decide how many shares will be gifted.
3. Confirm the share class and rights.
4. Obtain a professional valuation where appropriate.
5. Complete a stock transfer form.
6. State that no consideration is being paid.
7. Obtain board approval where required.
8. Update the company’s register of members.
9. Cancel or replace the existing share certificate.
10. Issue a certificate to the family member.
11. Update PSC information where necessary.
12. Report the shareholder change in the company’s confirmation statement.

The family member normally becomes the legal shareholder when their name is entered in the register of members.

Is Stamp Duty Payable on Gifted Shares?

Stamp Duty is not normally payable when shares are given as a genuine gift and the recipient provides no money or other consideration.

The stock transfer form should make clear that no consideration is being paid. An exempt gift generally does not need to be submitted to HMRC for stamping.

If the recipient takes over a debt or provides something in return, the transfer may not qualify as a simple no-consideration gift.

Is Capital Gains Tax Payable?

A gift is normally treated as a disposal for Capital Gains Tax purposes.

When shares are given to someone other than a spouse or civil partner, the transferor may be treated as disposing of them at market value—even if the recipient pays nothing.

Any taxable gain may therefore be based on the difference between:

• The shares’ market value at the gift date; and
• The transferor’s allowable cost

This makes an independent valuation particularly important for shares in a private company.

What if I Give Shares to My Spouse or Civil Partner?

Transfers between spouses or civil partners who meet the relevant conditions are generally made on a no-gain, no-loss basis for Capital Gains Tax.

This usually means no immediate taxable gain arises. The recipient normally takes over the transferor’s existing tax cost, which affects the gain if the shares are sold later.

Special rules may apply during separation or divorce.

Can Gift Hold-Over Relief Apply?

Gift Hold-Over Relief may defer Capital Gains Tax on qualifying business-share gifts.

It may be available where the shares are:

• In an unlisted company; or
• In the transferor’s personal company; and
• The company mainly conducts trading rather than investment activities

The gain is effectively deferred and may become relevant when the recipient later disposes of the shares.

A joint claim is generally required from the person giving and receiving the shares.

Could Inheritance Tax Apply?

A gift of shares may also be relevant for Inheritance Tax.

The treatment can depend on:

• The value of the shares
• The relationship between the parties
• Whether the donor survives for the relevant period
• Whether the donor retains any benefit
• Whether the company is a trading or investment business
• Whether Business Relief is available
• Other gifts made by the donor

A gift should be properly valued and documented, even where no immediate tax payment is expected.

Can I Give Shares to My Child?

It may be possible to give shares to a child, but additional legal, administrative and tax issues can arise.

If a parent gives shares to an unmarried minor child and the resulting income exceeds the applicable limit, dividends may be treated as the parent’s income for tax purposes. The current threshold is generally £100 of income per parent, per child, per tax year.

The company’s articles may also restrict ownership by minors. Professional advice is advisable before transferring shares directly to a child.

Will the Family Member Receive Dividends?

Yes, if the shares carry dividend rights and the company lawfully declares a dividend.

The recipient will also receive any applicable:

• Voting rights
• Capital rights
• Transfer rights
• Redemption rights
• Rights on a company sale or winding up

You cannot usually give someone only the dividends while retaining all other ownership rights unless the share structure legally supports that arrangement.

Can I Give Only Part of My Shareholding?

Yes. You can transfer some shares and retain the rest.

For example, if you own 100 ordinary shares, you could give:

• 10 shares, leaving you with 90%
• 25 shares, leaving you with 75%
• 50 shares, leaving each person with 50%

Check how the transfer affects voting control, dividend entitlement and PSC status.

Will the Gift Change PSC Information?

Possibly. The company should reassess its people with significant control after the transfer.

A person may qualify as a PSC if they:

• Own more than 25% of the shares
• Control more than 25% of the voting rights
• Can appoint or remove a majority of directors
• Otherwise exercise significant influence or control

Required PSC changes must be reported separately to Companies House.

Is Gifting Shares the Same as Issuing New Shares?

No.

A gift usually transfers existing shares from one shareholder to a family member. The total number of issued shares remains unchanged.

Issuing new shares creates additional shares and can dilute existing owners. A new allotment requires a different approval process and form SH01 must normally be filed with Companies House within one month.

Family Share Gift Checklist

Before making the gift:

• Review the articles and shareholders’ agreement
• Check transfer restrictions and pre-emption rights
• Obtain a share valuation
• Consider Capital Gains Tax
• Check eligibility for Hold-Over Relief
• Consider Inheritance Tax
• Review special rules for spouses or children
• Complete the stock transfer form
• Obtain board approval
• Update the register of members
• Issue new share certificates
• Update PSC information
• Report the shareholder change through the confirmation statement

Final Thoughts

You can give shares in a UK limited company to a family member, but the transfer must follow the company’s governing documents and be recorded correctly.

A genuine gift normally carries no Stamp Duty, but Capital Gains Tax and Inheritance Tax may still apply. Tax advice is particularly important for valuable shares, family-company dividends or gifts to children.

‍