Share restructure. Alphabet shares for better divi distribution.

[WTFH]

Would this money be coming back to you directly or indirectly?

Depends.

Elaborate please.

[pscont]

Elaborate please.

Nothing to elaborate if you pay divi to your dad.
The money will never come back to you, but he might buy a chocolate for the kid when he visits.
So it depends.

[AtW]

Gifting shares will trigger CGT

[northernladuk]

I never said it is for nothing, if you could be arsed to read the topic.
Also, I wont, and this is more of an example situation.

Well it's stupid example situation. Instead of plucking dumb, baseless and half thought out examples out of thin air why not try understand the whole legislation in detail and THEN try and analyse your options.

If you are getting anything back in return that isn't around the payment for the shares then you've got a problem and it looks like you are evading tax. If you take payment for the shares which is tiny compared to the dividends given then it's again, not business related and just looks like another evasion tactic.

Stop with the stupid ideas, go do some of your homework to try and understand the actual basics and the apply some logic, not guesswork.

[pscont]

If you take payment for the shares which is tiny compared to the dividends given then it's again, not business related and just looks like another evasion tactic.

How so?
Why dont you (or cant you) read the legislation and provide firm terms, not 'looks like' hypotheses.

[AtW]

How so?
Why dont you (or cant you) read the legislation and provide firm terms, not 'looks like' hypotheses.

To be sure you will need to get valuation approval from HMRC - if you sell below market value then it’s CGT and/or IHT

[WordIsBond]

There is usually little reason for having different classes of shares if they all have the same rights, unless you want to make the classes separately redeemable or such.

All shares have the same voting rights.

Class A shares (90% of total shares) are owned by my bride and me, 45% each.

Class B shares are owned by PAYE employees and subcontractors roughly in proportion to their contribution to our contracting revenue stream. Two employees have gifted half of their shares to spouses. Effectively, we use dividends on Class B shares as a tax-efficient bonus scheme. It does mean that if someone has a less productive year they will still get a proportional take on the dividends, but that fosters a team mindset which is useful because many of our contracts end up being team projects anyway. Class B shares are indeed separately redeemable but that is not the only purpose or even the primary one for having them. The purpose was to give employees an equity stake and profit sharing (that's definitely a business reason and one that HMG seems to think is good) without ceding control of the company (that's also definitely a business reason). Class B shares receive more total dividends than Class A. To accomplish that without alphabet shares would give up control.

Class C shares came into existence because one employee left the contracting wing to pursue an R&D project as I described in an earlier comment. The shareholding reflects the business reality that we have two different businesses going now.

It's hard to imagine a business reason for a one-man band to use alphabet shares. Advisors may be recommending them for spouses to take advantage of the £2K dividend allowance. That makes tax sense but it is hard to come up with a reason that it helps the business. The amount involved is small enough that HMRC may never challenge it.

[WordIsBond]

Nothing to elaborate if you pay divi to your dad.
The money will never come back to you, but he might buy a chocolate for the kid when he visits.
So it depends.

OK, so you want to give your parents some money by giving them shares, and you are counting on it never being provable that the money is going to come back to you.

How much money are we talking here?

[northernladuk]

OK, so you want to give your parents some money by giving them shares, and you are counting on it never being provable that the money is going to come back to you.

How much money are we talking here?

As much as can evade the most tax..

[meridian]

As much as can evade the most tax..

It’s not as far-fetched as it sounds.

The company will need to pay full tax on pre-dividend income anyway. Any saving will come from splitting the dividends sufficiently so that OP and his beneficiary (say, Dad) are both under the higher rate tax threshold.

Dad will now need to furnish a self-assessment every year and include these dividends, so unless he does it himself that will be extra for the accountant. Plus he’s now brought himself to the attention of HMRC.

Any hint that the income is coming back from Dad to son will be taken as evasion and taxed in full plus penalties. So any future loan for, say, a deposit on a house will need to be drawn up legally as a loan (with interest, etc) to avoid any suggestion of impropriety.

Apart from having to now furnish a self assessment return, it looks like a winner for Dad.