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I hold several shares in good income-earning utilities, acquired during the Margaret Thatcher privatisation years. They have grown significantly as I reinvested the dividends and I hold them through paper certificates.
However, some of these are designated shares bought in the names of my three children. The certificates feature my full name and then say “XXX ACCT”, where XXX are the initials of my children.
I am now wondering how these shares will be treated for tax purposes if I transfer them to my children. Am I regarded as the guardian of the shares on their behalf? Or am I regarded as the outright owner? If I am the beneficial owner, I face a large capital gains tax (CGT) bill on the transfer of the shares. But if my children are the outright owners, there will be no need to transfer the shares and no potential CGT bill.
Tim
Anna Warren, tax director at Bentley Reid, says:
It sounds as though what you actually have are designated accounts for your children, with each account holding a certain number of shares. A designated account for a child is usually in the name of the parent and is essentially held by the parent on behalf of the child.