Private Company Shares Owned By Children

Children can hold shares in a private company in England and Wales. There is no statutory provisions prohibiting a child below the age of 18 from owning shares.

 Benefits of Allotting Shares to Children

Some family owned private companies tend to allot shares to children as a means to providing them with:

  • Capital Assets which will increase in value as part of a longer term inheritance and capital gains tax planning
  • Dividend Income on shares to utilise the children’s personal allowance, and where applicable the lower rate tax on dividends

If the parents have an interest in the company, they are still liable for the income received by the children or step child under the age of 18.

This means any income over £100 from assets given to them by the parents is taxed on the parents rather than the children.

However if the shares are given by the grandparents who own the company shares, the children will be taxed on the income received instead of the parents, therefore saving tax.

It is important to take professional advice on which class of share should be issued to the children or step child in order to ensure tax saving results.