Transferring shares to a family member

Transferring shares to a spouse, child or other relative uses the same stock transfer form as any other transfer, but a gift for nothing usually attracts no stamp duty and does not need to go to HMRC. The points that catch families out are in the articles, which may restrict who can hold shares, and in the tax that follows the gift, which differs sharply between a spouse and anyone else.

This page works through a family transfer from start to finish. The general rules for any transfer of private company shares are in transferring shares in a private company.

Do the articles allow a transfer to a family member?

Section 544 of the Companies Act 2006 makes shares transferable in accordance with the company’s articles, so the articles come first. Three types of provision are common:

Permitted transfers. Many bespoke articles let a shareholder transfer to a spouse, civil partner, child, grandchild or family trust without offering the shares to other shareholders first. Read the definition carefully: some include stepchildren or siblings, some exclude anyone under 18, and some require the shares to be transferred back if the relationship ends.
Pre emption on transfer. If the relative is not a permitted transferee, the shares may have to be offered to the existing shareholders first. Statutory pre emption in section 561 applies only to new allotments, so any right on transfer comes from the articles or a shareholders’ agreement. See pre emption rights.
Directors’ discretion. Model article 26 lets the directors refuse to register any transfer. In a family company where the transferor is also the only director this is rarely a problem, but where other family members sit on the board it can be.

If the articles get in the way, they can be amended by special resolution under section 21, or the other shareholders can waive their rights in writing for the particular transfer.

How is the stock transfer form completed for a gift?

Section 770 prevents the company registering a transfer without a proper instrument of transfer, which for private company shares is normally a stock transfer form signed by the transferor. HMRC guidance sets out how to complete it:

Give the number, class and type of shares, the transferor’s details as registered holder, and the recipient’s full name and address.
Where nothing is given for the shares, enter Nil as the consideration.
Where no consideration is given, neither certificate on the back needs completing, no stamp duty is payable, and the form does not usually need to be sent to HMRC.
Where the relative pays £1,000 or less and the transfer is not part of a larger transaction, certificate 1 is completed and the form again does not usually go to HMRC.
Where the relative pays more than £1,000, stamp duty at 0.5% of the consideration is payable and the form must be submitted to HMRC within 30 days of being signed.

Watch for a gift that is really a sale. If the relative takes on a debt, such as the transferor’s overdrawn loan account or a mortgage on shares, HMRC treats debt assumed as consideration. More detail is in stamp duty on shares.

What does the company do once it receives the form?

The board considers the transfer, confirms any pre emption process has been followed or waived, and resolves to register it.
Under section 771 the company must register the transfer, or give notice of refusal with reasons, within two months of the form being lodged. Model article 26(4) keeps the transferor as the holder until the register is updated.
The register of members is updated with the details section 113 requires, including the shares held and the date the relative became a member.
Section 776 requires a new share certificate to be ready within two months of the transfer being lodged. The old certificate is cancelled.
If the transfer takes anyone above or below more than 25% of the shares or votes, or moves a holding between the 25%, 50% and 75% bands, Companies House guidance requires the PSC change to be notified within 14 days. See notifying PSC changes.

How is a transfer to a spouse or civil partner taxed?

HMRC guidance says no capital gains tax is paid on assets given or sold to a husband, wife or civil partner, unless the couple were separated and did not live together at all in that tax year, or the assets are goods for the spouse’s business to sell on. The spouse takes over the original acquisition cost for any later sale. The legislation is section 58 of the Taxation of Chargeable Gains Act 1992, explained in spouse transfers and capital gains.

For inheritance tax, gifts between spouses or civil partners are exempt where they are legally married or in a civil partnership and live in the UK permanently. Unmarried partners get neither relief, so a transfer to a long term partner is taxed like a gift to anyone else.

A transfer to a spouse to spread dividend income needs care. Section 626 of the Income Tax (Trading and Other Income) Act 2005 protects an outright gift between spouses from the settlements rules only if it carries the right to the whole of the income, is not wholly or substantially a right to income, and is not subject to conditions or capable of benefiting the giver. Separate non voting shares carrying dividends only, or a gift that must be handed back, can fail that test.

How is a transfer to a child or other relative taxed?

Capital gains tax. For gifts to anyone other than a spouse, HMRC guidance requires the gain to be worked out using market value at the date of the gift, even though nothing was received. Gift holdover relief may defer the gain for shares in a trading company; see gifting shares in a family company.
Inheritance tax. HMRC guidance says gifts made less than seven years before death may be taxed, depending on the recipient, the value and when the gift was made.
Dividends on shares given to a minor child. Under section 629 of the Income Tax (Trading and Other Income) Act 2005, income arising under a settlement and paid to a relevant child of the settlor is taxed as the parent’s income, unless the child’s total income of that kind for the tax year is £100 or less. Section 620 defines a settlement to include any disposition, arrangement or transfer of assets, so an outright gift of shares from parent to child is caught and dividends above that limit are taxed on the parent.

Can shares be given to a child under 18?

Families often prefer to hold a minor’s shares through a bare trust, with adults registered as the legal holders, rather than registering the child. A company is not bound to recognise any trust over its shares under model article 23, so the trustees deal with the company and the trust deed governs the child’s entitlement. HMRC guidance on parental trusts says that where a parent sets one up for a child under 18 who has never been married or in a civil partnership, the parent as settlor is responsible for the income tax. Check the articles too, as some restrict transfers to trustees or to anyone under 18.

How might this work in practice?

Illustration only. A father owns 80 of 100 shares in a trading company and his daughter, aged 24, works in the business. He gives her 20 shares. The articles list children as permitted transferees, so no offer round is needed. He signs a stock transfer form showing Nil consideration and leaves both certificates blank. The board, made up of the father and the other shareholder, resolves to register the transfer, updates the register, cancels his certificate and issues new ones for 60 and 20 shares within two months. She does not become a PSC at 20%, but his holding falls from the 75% or more band to the band of more than 50% and less than 75%, so the change in his nature of control is notified to Companies House within 14 days. Separately, he works out the capital gains tax position using market value and considers a holdover relief claim, and he notes the date of the gift for inheritance tax.

What mistakes come up most often?

Signing the form without checking whether the relative is a permitted transferee under the articles.
Treating a transfer to an unmarried partner as if it qualified for the spouse reliefs.
Sending a nil consideration form to HMRC for stamping, or missing that taking on a debt counts as consideration.
Giving shares to a minor child to shelter dividends, without realising section 629 taxes them on the parent.
Gifting shares to relatives when financially stretched. Under sections 339 and 341 of the Insolvency Act 1986, a trustee in bankruptcy can ask the court to reverse a gift made within five years before bankruptcy, and insolvency at the time is presumed where the recipient is an associate. See what happens to shares when a shareholder goes bankrupt.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.