IHTM14852 | Lifetime transfers: transfers by close companies: transfers of value
From HM Revenue & Customs · Inheritance Tax Manual
When a close company makes a transfer of value, tax is charged as if
each individual participator () had made a transfer of value of
the amount apportioned to them
by reference to their rights and interests in the company immediately before the transfer.
Example
A company has issued share capital of 100 £1 Ordinary Shares, of which 50 are owned by Xavier and 50 are owned by Yasmin. The company makes a gift of £500,000 to trustees for the benefit of Xavier’s and Yasmin’s respective children. Each of the two participators, Xavier and Yasmin, is treated as having made a transfer of £250,000.
If the company is paying the tax, the amount to be apportioned to each participator is grossed up. explains where the liability for payment of the tax falls for a transfer by a close company ().
can apply to company dispositions just as it can to individuals if the conditions are met. See for further details.