Assets gifted to employees or shareholder family

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Corporation Tax

Guidance

This note provides guidance on the corporate capital gains rules that apply where a company gifts assets either to employees or to shareholders (or members of their family). It also briefly considers other tax aspects of such gifts, including corporation tax deductibility and income tax. For an overview of corporate capital gains, see the Corporate capital gains ― overview guidance note and for transactions with connected parties generally, see the Connected party disposals guidance note.

Why do companies give away assets?

Whilst large companies do not generally give away their assets (other than perhaps to registered charities), it is quite common for smaller companies (especially close companies) to transfer assets to employees or shareholders for no consideration or for consideration less than market value. This can be for a variety of reasons, but often is in recognition of employees providing extra services not covered by their usual remuneration or in order to gift a lump sum to younger generations out of the assets of a family company.

The

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Jackie Barker

Tax Partner at Wells Associates , Corporate Tax, OMB, Employment Tax, Personal Tax, VAT, IHT Trusts and Estates, Accounting

I have worked in tax since becoming an associate of the CIOT in 2004, having previously qualified as a member of ACCA.As tax partner with Wells Associates I advise on all aspects of direct taxation including personal and corporate planning. We work with a wide range of individuals and owner-managed businesses offering guidance and support at all stages, from assisting with compliance matters through to advising on more complex strategic matters and providing tax efficient solutions.

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