Holdover relief

[takenforafool]

I am a trustee for a discretionary trust. I have previously distributed shares to beneficiaries, by sending in the share certificate and asking the registrar to issue a new certificate in the beneficiary's name. I have also applied for holdover relief, so the beneficiary has to account for any gain when they sell, using the trust's base costs.

This time though, I want to distribute shares to a minor. The child will become absolutely entitled to the shares and I shall ask the registrar to re-certificate the holding as the parent's name with the child's initials.

In terms of the Claim for hold-over relief (I'm not allowed to post links but it is top result if you google 'HS295 claim')
I am the transferor, but who is the transferee? Is it the parent who has a UTR or the child who does not? Presumably the parent would have to sign?

If the shares were sold soon after the transfer, the gain would be within (this year's) annual allowance, so there should be no tax.

[scrumpyjack]

I would think the parent is the transferee in their capacity as bare trustee for the minor. The parent will then have to register the bare trust with the Trust Registration Service

The shares would usually be registered in the name of the parent but designated with the child's initials eg A N Parent a/c ABP

The child is then the beneficial owner of the shares and any dividends or capital gains on the shares will be taxable as the child's, not the parent's.

[csearle]

I am a trustee for a discretionary trust. I have previously distributed shares to beneficiaries, by sending in the share certificate and asking the registrar to issue a new certificate in the beneficiary's name. I have also applied for holdover relief, so the beneficiary has to account for any gain when they sell, using the trust's base costs.

This time though, I want to distribute shares to a minor. The child will become absolutely entitled to the shares and I shall ask the registrar to re-certificate the holding as the parent's name with the child's initials.

In terms of the Claim for hold-over relief (I'm not allowed to post links but it is top result if you google 'HS295 claim')
I am the transferor, but who is the transferee? Is it the parent who has a UTR or the child who does not? Presumably the parent would have to sign?

If the shares were sold soon after the transfer, the gain would be within (this year's) annual allowance, so there should be no tax.

Hi, welcome to The Lemon Fool. I see one response has come your way. Hope you find out what you are looking for. C.

[takenforafool]

I would think the parent is the transferee in their capacity as bare trustee for the minor. The parent will then have to register the bare trust with the Trust Registration Service

The shares would usually be registered in the name of the parent but designated with the child's initials eg A N Parent a/c ABP

The child is then the beneficial owner of the shares and any dividends or capital gains on the shares will be taxable as the child's, not the parent's.

Having gone through the process of the Trust Register myself, when it was first set up, I would not wish that on anyone. It was the worst IT implementation I've ever seen! I'm hoping that the parent may be able to sell the shares and re-invest into an existing junior ISA, and so dissolve any bare trust, before HMRC notice its fleeting existence. I assume junior ISA's themselves do not need registration?

[eisman]

Takenforafool said:

I am a trustee for a discretionary trust. I have previously distributed shares to beneficiaries, by sending in the share certificate and asking the registrar to issue a new certificate in the beneficiary's name. I have also applied for holdover relief, so the beneficiary has to account for any gain when they sell, using the trust's base costs.

Although a trust capital gain can be avoided by a claim for holdover relief, this does not avoid any inheritance tax 'exit charge' that arises on such transfers. Have you taken this into account? If not, see HMRC inheritance tax manual IHTM42110 et seq:
https://www.gov.uk/hmrc-internal-manual ... /ihtm42110

Eisman