How to Transfer Shares to Your Children the Right Way in the UK?
How to Transfer Shares to Your Children the Right Way in the UK?
“Can I pass my shares to my children without creating a tax mess later?”
That is usually the first question parents and business owners ask. Closely followed by a quieter worry: what if I get this wrong and it affects their future or costs more than it should?
If you are searching for “How to Transfer Shares to Children in the UK”, you are not alone. This is one of the most common questions we hear from families who want to plan ahead, not panic later. The process itself is not unusual, but the details matter. Tax rules, paperwork, age limits, and company restrictions all sit in the background, and missing one step can turn a sensible gift into a long-term headache.
The good news is this. When handled properly, transferring shares to your children is a routine legal process. In this guide, we will walk you through clear steps, real family examples, and practical points that actually matter. No legal jargon. No guesswork. Just calm, experienced guidance so you can make informed decisions with confidence
Why Parents Transfer Shares to Children
Most parents do not look at share transfers as a legal task. They see it as planning ahead while things are stable, not when pressure forces rushed decisions. This is where motivation matters before paperwork
The most common reasons we see in practice are clear and practical:
- Passing on a family business: Family businesses want continuity. Transferring shares early helps children step into the business gradually, with guidance rather than shock.
- Planning finances long-term: A structured transfer supports sensible tax planning and avoids last-minute fixes later.
- Reducing future inheritance issues: Clear ownership now often prevents disagreements after death.
- Teaching responsibility: Shares introduce accountability, not just financial benefit.
Now that the “why” is clear, the next step is understanding how to transfer shares properly, without missing legal or tax steps.
Step-by-Step Process to Transfer Shares
Once the purpose is clear, the process becomes far less intimidating. This is where structure matters. When people ask us how to transfer shares, they usually want to know what to do first, what to avoid, and how to make sure nothing gets stuck halfway. Here is the process followed in practice:
Step 1: Get the Stock Transfer Form
You can obtain this form from your broker, the company’s registrar, or the
Law Firm Peterborough. Using the correct version matters, as outdated forms often delay registration.
Step 2: Fill It Correctly
Filling the form incorrectly is where errors come in. Names must match company records exactly, and the number of shares must be precise. One missing detail can send the form straight back.
Step 3: Declare the Gift Properly
If you are gifting shares, state this clearly. Ambiguous wording can raise tax questions later, even when no money changes hands. Genuine gifts usually attract no stamp duty, but the exemption must still be confirmed on the form.
Step 4: Send Documents to the Registrar
Submit the completed form to the company’s registrar or broker. Keep copies. They matter more than people think. After that, the company updates its share register and issues a new certificate in your child’s name. Only then is the transfer complete.
Now that the process is clear, the next question is unavoidable: what tax implications sit behind these steps, and how do you manage them properly?
Tax Implementation Explained Properly
At this point, the majority of share transfers encounter problems and are either rejected or delayed. It's not that people avoid paying taxes; rather, it's that nobody helps them understand them. If you want to plan how to transfer shares properly, tax sits at the centre of every decision. Here is what actually matters, without noise.
1. Capital Gains Tax
Gifting shares counts as a disposal at market value. If the shares have grown since you bought them, CGT may apply. Your annual allowance can reduce this, but it does not erase poor planning.
2. Gift Hold-Over Relief
This relief allows you to delay paying Capital Gains Tax, but it only applies to certain types of shares. Both the parent and the child must make the claim together. If this step is missed, the tax relief cannot be used.
3. Inheritance Tax
Most share gifts are treated as part of your estate for inheritance tax at first. If you live for seven years after making the gift, the shares usually fall outside your estate, and no inheritance tax is due on them. If you die within those seven years, tax may still apply, but the amount can be reduced over time depending on how long you lived after making the gift.
4. Dividend tax rules by age
For children under 18, dividends above £100 link back to the parent. For adults, the tax follows the child’s own income position.
Mini example:
A parent gifts shares to an adult son already working in the business. Dividends fall under the son’s tax band, and CGT is deferred using holdover relief.
Next, we look at what changes when the child is under 18 and why the structure matters more than people expect.
What If Your Child Is Under 18?
This question comes up more often than any other, and it usually stops parents in their tracks. The law is clear: children under 18 cannot hold shares in their own name in the same way adults can.
In practice, families often use a bare trust. An adult, usually a parent, holds and manages the shares until the child reaches 18. The shares belong to the child, but the trustee controls decisions like voting and paperwork in the meantime.
This structure creates a balance:
- You keep control while the child is young.
- The child gains full ownership at 18, automatically.
That final point matters. Once set up, you cannot change your mind later. For that reason, this is never a step to rush. Next, we look at when legal advice becomes essential rather than optional.
What is the Role of a Solicitor?
Most families think free 30 mins legal advice only fills forms. In reality, the real work happens quietly, long before anything gets signed.
1. Legal Checks
A
family solicitor in Peterborough reviews company articles, shareholder agreements, and voting rules. These documents often restrict transfers, and skipping them can invalidate the process.
2. Working alongside Accountants
Share transfers sit between law and tax. Solicitors coordinate with accountants to align paperwork with tax reliefs and reporting, so nothing contradicts later filings.
3. Reduce the risk of Future Disputes
Clear records, correct wording, and proper approvals prevent disagreements between siblings or business partners years later.
4. Making the Transfer Future-proof
The transfer must remain legally valid years later, even if the business structure changes, tax rules are reviewed, or family circumstances shift. Proper checks and documentation ensure the transfer holds up if it is ever examined by HMRC, challenged within the family, or reviewed during a sale or succession process.
With the legal groundwork understood, the final step is choosing the right firm to guide the process properly from start to finish
Why Do Families Across the UK Choose Fosters Legal Solicitors?
When families look for legal help, they usually want calm answers, not complicated explanations. That is where local experience makes a difference.
Hands-on Experience
Fosters Legal Solicitors regularly advises families who want to pass shares across generations while keeping businesses steady and relationships intact.
Clear Advice
The focus stays on what matters. You get straightforward explanations, practical steps, and no unnecessary paperwork layered on top.
Local Support
With strong links across Stevenage, Peterborough, and Watford, advice stays grounded in real regional business needs, not generic guidance.
One-to-one Guidance
Every family situation differs. Advice reflects that, with solutions shaped around people, not forms.
Support beyond Share Transfers
Families often face connected issues. Fosters Legal Solicitors also provides experienced support in
family law matters, employment concerns with an
employment law solicitor, and wider private client work, so advice stays joined up rather than fragmented.
With the right support in place, the final step is understanding how to move forward confidently and avoid common mistakes.
Final Thoughts
By now, the picture should feel clearer. We have looked at why families choose to pass shares to their children, how the process works step by step, where tax issues often arise, and when legal support becomes essential. Each part matters because share transfers are not just a formality. They shape future ownership, family clarity, and long-term security.
At its core, transferring shares is about legacy, not paperwork. Done properly, it brings structure, confidence, and peace of mind. The right advice does not add stress or cost. It removes uncertainty and prevents problems that surface years later.
If you are thinking about how to transfer shares, a short conversation at the right time can make all the difference. Speaking to an experienced solicitor like Fosters Legal Solicitors
Frequently Asked Questions
Can I gift shares to my children in the UK?
Yes, you can gift shares to your children in the UK. The transfer must be recorded using a stock transfer form, and tax rules such as Capital Gains Tax and Inheritance Tax need to be considered before completing the gift
Can parents transfer shares to children?
Parents can transfer shares to their children at any time. The process depends on the child’s age and the company’s rules, and proper documentation is essential to ensure the transfer is legally valid
Can my mum transfer her shares to me?
Yes, your mum can transfer her shares to you either as a gift or through a sale. The transfer must follow company procedures, and any tax implications should be reviewed before it is completed
How do you transfer your shares to someone else?
Shares are transferred by completing a stock transfer form, declaring whether the transfer is a gift or sale, and submitting it to the company or registrar so the share register can be updated
How to legally transfer shares?
To legally transfer shares, you must follow the company’s articles of association, complete the correct paperwork, address any tax requirements, and ensure the company updates its official records
