Many people consider how best to share their success with loved ones, from transferring property or company shares to gifting luxury items or substantial cash sums.
While generosity is often well-intentioned, large gifts can have lasting legal, financial and personal consequences.
In this blog, our Corporate, Residential Property and Family lawyers share practical legal guidance to help you give with confidence, ensuring that generosity today doesn’t create tomorrow’s problems.
Business and Share Gifting
Gifting company shares
Before gifting any shares which you hold in a company to another person, you should first review and consider the company’s articles of association and the shareholders’ agreement (if there is one).
Both documents may contain restrictions on gifting or transferring shares, or alternatively, specific procedures that must be followed.
It is important to understand that the company’s articles bind all shareholders and if you are a party to a shareholders’ agreement or have signed a deed of adherence in relation to the agreement, this will be binding on you too.
A failure to comply with the company’s articles or shareholders’ agreement will be a breach of contract and a claim may be brought against you.
The typical restrictions to look out for within the articles or shareholders’ agreement are as follows:
- A prohibition on transfers: this is often for a specified period of time, to certain transferees or in specific circumstances rather than absolutely, but it is worth identifying any such clause within the documents and ensuring that there are no restrictions that apply to your circumstances.
- Refusal of registration: The power to refuse to register a transfer of shares is sometimes given to the company’s directors.
- Pre-emption rights: where there are pre-emption rights, a transfer of shares is prohibited unless the proposed transferor first offers the shares to the other existing shareholders. This is not included in the model articles of association, but companies often modify their articles to include this provision.
- Certain classes of shares: it may be the case that the articles or shareholders’ agreement prohibit the transfer of certain classes of shares, but allow the transfer of others.
Where there are restrictions within the articles of association or the shareholders’ agreement, it is still possible to gift your shares, provided the correct procedure is followed.
For example, the shareholders could pass a shareholders' resolution to amend the articles to remove the restriction, or resolve to disapply the relevant provision. Likewise, if the restriction is contained in the shareholders’ agreement, the parties to the agreement can agree to amend the agreement or allow the relevant provision to be disapplied.
Aside from restrictions, a company’s articles of association and shareholders’ agreement will often include provisions on how the shares must be valued before they are gifted or transferred, and you will therefore not be permitted to decide a value yourself.
This valuation provision must be complied with, or the transfer will be invalid, and action may be brought against you for not complying with the articles/shareholders’ agreement.
Tax advice should be sought in order to determine the potential tax consequences on the proposed recipient of the gifted shares and any applicable reliefs (see Tax relief opportunities below) before deciding whether to proceed with a gift of shares.
It is important to ensure you are aware of what filings must be made at Companies House following the gifting of shares. If the transfer results in any alteration to the company’s persons of significant control information, Companies House must be notified, and the correct forms must be filed to reflect this.
Furthermore, it is essential that the existing share certificate for the transferred share is cancelled and a new certificate is issued to the transferee within two months of the transfer being lodged with the company.
If the transferor still retains shares in the company after the gift, a new share certificate must be prepared to reflect their updated shareholding.
Business succession planning
When gifting shares as part of business succession planning, it is essential to consider the corporate governance and control implications that will accompany the transfer(s). A gift of shares may alter the balance of voting power within the company and impact who can appoint and remove directors, which is why it is crucial to consider the rights attached to the shares being transferred.
Shares can carry voting, dividend and capital rights; therefore, it is important to have a clear, structured plan in place to ensure that any gifting of shares aligns with your long-term intentions for the company. It may only be suitable in your circumstances to transfer shares without voting rights for example.
Tax relief opportunities
It is beneficial to consider the potential tax relief opportunities for the company before making any gifts or transfers.
Two key reliefs to consider are business property relief and gift hold-over relief.
Business property relief (BPR)
This relief reduces the tax consequences on transfers of business assets, including shares. It is important to consider this relief with any long-term planning for the company, as it can allow the value of the company to be preserved.
To qualify for the relief, the company must be a trading company or the holding company of a trading group. The transferor must also have held the shares for a period of two years immediately before the gift.
Gift hold-over relief
Gift hold-over relief is available under section 165 of the Taxation of Chargeable Gains Act 1992. This relief is a means of deferring capital gains tax (CGT) that may otherwise arise when shares are gifted. Ordinarily, gifting shares triggers a deemed disposal for CGT purposes, despite no cash being received.
This relief allows the donor and recipient of the shares to make a joint election to hold over the gain, meaning no immediate CGT is payable. Instead, the recipient essentially inherits the donor’s base cost of the shares, and the deferred gain will materialise only when the recipient later disposes of the shares.
This relief is only applicable for unlisted trading companies and will not be available for companies that mainly hold investments.
As referenced previously, it is important to seek tax advice before gifting any shares in order to identify any tax charges and any reliefs which may apply.
Protecting Family Gifts
Many parents and grandparents will choose to gift assets to help their loved ones.
Significant sums may be provided as a deposit to help a child or grandchild onto the property ladder, a parent may transfer property into a child’s name before or during a marriage, or money may be given to ease day-to-day pressures.
A well-timed gift can have a hugely positive impact on long-term financial security, but consideration needs to be given as to how the gift will be treated if there is a later separation or divorce.
How the court views gifts and loans
When couples separate, the family court can look closely at whether money provided by relatives was a gift or a loan, and this can have an impact on the financial outcome.
A gift is something given without expectation of repayment or control over how it is used.
In most divorce cases, gifts are treated as part of the matrimonial assets and, in some circumstances, can be divided between the parties, particularly where required to meet needs.
Even if the gift was clearly from one spouse’s family, the court’s priority will be ensuring that both parties and the children's needs are met.
By contrast, a loan is expected to be repaid and may be treated as a liability, reducing the overall assets to be divided.
Not all loans are treated equally, and the courts will distinguish between hard loans, where repayment is realistically expected and soft loans, which are informal and unlikely to be enforced.
How to protect family gifts
While it is impossible to predict the future, there are practical steps families can take to protect assets:
- Formalise the agreement - if money is intended as a loan, draw up a written loan agreement setting out the amount, repayment terms and any interest.
- Record your intentions – if a gift is meant for your child alone, make this clear in writing. You might specify that the gift is conditional upon it being repaid in the event of separation.
- Use pre- or post-nuptial agreements – these agreements can record how family gifts and contributions will be treated if the marriage ends. A well-drafted agreement can provide clarity about who certain property belongs to and that it will not be shared in a future divorce. Although not automatically binding, nuptial agreements are increasingly given significant weight by the courts, provided certain safeguards are in place.
- Consider a cohabitation agreement – many couples buy homes together without marrying but the legal protections for cohabiting partners are far weaker. If one partner receives financial help from family to fund a deposit or contribute to the purchase, a cohabitation agreement can record how that contribution should be treated if the relationship ends. A cohabitation agreement can work in conjunction with a declaration of trust to confirm who owns what share of the property and whether any family gift or loan should be repaid. Having this agreement in place can prevent litigation in the event of a relationship breakdown.
Before gifting or loaning substantial sums, it is sensible to seek specialist advice.
Considering your options can help ensure that any gifts to loved ones benefit your family members in a way that you intend, whatever the future may hold.
Gifting Residential Property
How do I gift my property?
We recommend that you take advice from our Wills, Trusts and Probate team before making any gift. The team will advise you on the tax treatment of the gift before you begin the transfer process.
Once you have carefully considered the tax implications of gifting your property and you are happy to proceed, our specialist Residential Property team will then begin the transfer process.
A gift is treated similarly to any other property transfer. Regardless of whether or not money has changed hands, a formal application must still be made to the Land Registry to update the title.
Your appointed solicitor would draft a Transfer of Whole (TR1) or Transfer of Part (TP1), depending on your specific circumstances and the property being gifted. The Transfer must then be signed and witnessed by the donor (Transferor) and donee (Transferee). Both parties must be separately represented during this process.
When gifting property, your Residential Property Solicitor would also consider your stamp duty land tax (SDLT) position.
Usually, there is no SDLT to pay, as the duty is based on the consideration paid, which would be nil in the case of a gift. However, a prudent donor must recognise that the gift may impact the donee’s tax position.
How do I add or remove names from my title deeds?
In short, the specific process depends on the reason for the addition or removal.
At Myerson, we understand that life is not linear, and therefore, we would apply a clear and pragmatic approach to your circumstances and discuss with you the reason for the amendment and the implications.
Once instructed, we would review your title deeds to understand who the current proprietors are and to identify if there are any restrictions registered against the title or any third parties who would need to consent to the transfer, for example, a mortgage lender, landlord or management company.
Once we have a sound understanding of the background to the transfer and have reviewed the title, we would then draft the appropriate document, prepare the relevant application to the Land Registry, consider your SDLT position and submit the documents for registration.
Can I still gift my property to my loved ones if I have a mortgage?
It is sensible to contact your lender to discuss your options at the earliest opportunity, as a lender would require repayment of their loan before the property could be transferred to another person.
If you opt to transfer some or all of your beneficial ownership of the property without obtaining your lender’s consent, this could be a breach of your mortgage terms and conditions.
Before gifting your property to your loved ones, it is prudent to seek specialist advice.
By understanding the implications of making your gift before starting the transfer process, you can ensure that the legal transaction is as seamless as possible and meets your requirements without unknown or adverse consequences.
Integrating Gifts into Your Estate Planning
A gift is for life, not just for Inheritance Tax planning.
The season of gifting is upon us, and whilst it is about exchanging gifts between loved ones, why not consider if you can gift more to help reduce your inheritance tax (IHT) liability?
Small gifts allowance
Each person can gift up to £250 per person, per tax year, to as many individuals as they wish, IHT-free.
Lifetime Gifts
Gifts made during lifetime are potentially exempt from IHT if you survive 7 years from the date of the gift. Everyone has an IHT free allowance of £325,000 (called the ‘nil rate band’ (NRB)).
If the total value of gifts made in the 7 years before death exceeds the NRB, then the surplus value of the gifts will be subject to IHT at 40% (unless taper relief applies on the value of the gifts).
Gifts into certain types of trusts are treated differently and could be subject to IHT immediately.
If you are thinking about making a significant lifetime gift outright or to a trust, then you should take legal advice to check the potential tax consequences and consider whether you would like to update your Will to include a clause that says any IHT that might arise on failed gifts should be paid for out of the estate instead of the gift recipient.
Gifts to Charity and/or Spouses
Gifts made to UK-registered charities and to spouses are IHT-free. If you make gifts to your spouse, then there might not be any IHT payable in relation to the gift and it may reduce the value of your estate, but it will of course increase the value of your spouse’s estate and so you may want to seek some joint estate planning advice to check that you own assets between you in the most tax efficient way.
Gifts out of excess income
The gift will be IHT fee provided that:
-
- The gift is made from surplus income (i.e. not capital);
- The gift forms part of your normal expenditure and is paid out regularly (i.e. every Christmas or every month or twice a year); and
- You maintain your usual standard of living.
Annual exemption
You can give away up to £3,000 per tax year IHT-free. If the £3,000 allowance is not used, then it can be carried forward once to the following year.
You can do this at any time of the year, so why not start doing it at Christmas as a reminder to use the allowance rather than wasting it.
Gifts with Reservation (GROB)
This is when someone makes a gift, but retains a benefit in it. For example, if someone gifts a property, but he person giving it away continues to live in the property rent-free. Ot if someone gifts a piece of art and then continues to hang it in their own home, then you will have retained a benefit.
The consequence is that it will never fall outside of your estate for tax purposes whilst you continue to benefit from the intended gift, even if you survive 7 years, and it will therefore be subject to IHT as part of your estate at the time of death.
Furthermore, if you have given away your property and retained a benefit, then you may risk losing additional tax reliefs (the residence nil rate band) on death, which would result in there being more tax to pay than if you had either retained the property or gifted it effectively.
Business Property Relief (BPR) and Agricultural Property Relief (APR)
How BPR and APR are charged will change from 6 April 2026. The main change is a new cap of £1milllion that can qualify for 100% relief, with the value above the cap receiving 50% relief.
This will result in significantly more IHT for individuals owning business and/or agricultural assets. If you own assets that may qualify for BPR/APR, then you may wish to think about gifting these assets to a trust now before the cap is introduced.
Effective IHT planning is all about gifting rather than receiving, but you should always consider the tax consequences before going ahead with making gifts that alter the value of your estate to check that there are no unforeseen tax consequences and that it achieves what you want to achieve.
How Our Teams Work Together
At Myerson, our cross-departmental collaboration ensures that every aspect of your generosity is protected, both legally and financially, and personally.
Whether your gift involves property, shares, cash, or family support, our experts work together to safeguard your intentions and minimise tax exposure.
Speak to Us Before You Gift
Whether you’re transferring property, luxury assets, company shares, or substantial cash, our Wills, Property, Corporate, and Family teams can work together to ensure your generosity is protected, compliant, and tax-efficient.
0161 941 4000
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Sarah Whitelegge
Legal Director
Sarah has over 17 years of experience acting as a Family Solicitor and as a Legal Director in our team. Sarah has specialist expertise in complex children matters and has experience of dealing with applications for child arrangement orders, prohibited steps orders, and special guardianship orders.
About Sarah Whitelegge