How to gift shares to a relative or friend?

[Rajput1962]

I have 2 nephews who at some point will think about getting onto the housing ladder. One has a help to buy ISA, the other not. I am thinking that i would like to help with their individual deposits - maybe a few £10ks each. My original thinking was that i would sell some of my non-ISA account holdings and transfer the cash to them, but more than likely this will incur a capital gains tax liability. Obviously i would like to mitigate this!

It occurred to me that perhaps i could gift them the shares instead? After reading a few articles online, I have concluded, that the transfer would be at the purchase price, that i personally wouldn't incur CGT, but they would upon sale on the gain above my initial but price. Is this correct?!

If my thinking is correct, then they could utilise their own ISA/CGT allowances which would seem more efficient tax planning. It also reduces the value of my estate for IHT palnning.

I only have one investment in a listed company whilst the rest is in index funds/trackers. I think how it works is that i would need to contact the single company registrar and start a transfer process - though the holding is not in certificate form. So how does it work for an index tracker/fund?

Or can I not gift shares to relatives without paying CGT on the share transfer? Or is it a case of I just have to sell, pay any CGT, and then transfer under the 7 year rule?

[scrumpyjack]

I have 2 nephews who at some point will think about getting onto the housing ladder. One has a help to buy ISA, the other not. I am thinking that i would like to help with their individual deposits - maybe a few £10ks each. My original thinking was that i would sell some of my non-ISA account holdings and transfer the cash to them, but more than likely this will incur a capital gains tax liability. Obviously i would like to mitigate this!

It occurred to me that perhaps i could gift them the shares instead? After reading a few articles online, I have concluded, that the transfer would be at the purchase price, that i personally wouldn't incur CGT, but they would upon sale on the gain above my initial but price. Is this correct?!

If my thinking is correct, then they could utilise their own ISA/CGT allowances which would seem more efficient tax planning. It also reduces the value of my estate for IHT palnning.

I only have one investment in a listed company whilst the rest is in index funds/trackers. I think how it works is that i would need to contact the single company registrar and start a transfer process - though the holding is not in certificate form. So how does it work for an index tracker/fund?

Or can I not gift shares to relatives without paying CGT on the share transfer? Or is it a case of I just have to sell, pay any CGT, and then transfer under the 7 year rule?

No, if you give them shares it is treated as a disposal by you at market value (and subject to CGT) and an acquisition but them at that value. There used to be, many years ago, 'holdover' relief so no chargeable gain arose but that was largely abolished and I'm pretty sure would not apply in this situation. The advantage of giving them the shares is that it avoids dealing costs, assuming they are going to retain them. If you all have accounts at Hargreaves Lansdown they will transfer the shares at no cost.