Tax on Shares Issued to Non Employees

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This topic contains 1 reply, has 2 voices, and was last updated by  Jonathan Lea 2 years, 4 months ago.

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    I have a two year old company that is profit making and want to gift shares to a self-employed consultant who does some work for the company. What are the tax repercussions of doing this?


    Jonathan Lea

    Unfortunately HMRC will see these shares as a benefit in kind received in lieu of fees that would otherwise be taxable as income. The consultant would need to treat the value of the shares as part of their income for that year and declare tax on it (albeit they can in the future receive dividends as normal on such shares). Ideally a proper valuation needs to be carried out so as not to risk any liability for incorrect tax returns. Note that as an early stage pre-revenue startup that has yet to raise any money it should in a lot of cases be fine to assume that the shares are not worth anything and therefore there is no tax liability on the consultant being gifted the shares.

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