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Pre-float planning ― capital gains tax

The commentary set out in this guidance note applies to individuals rather than to the companies involved in the flotation. However, it is important that the impact of the flotation is considered from the perspective of all parties concerned to ensure that it is carried out in the most tax efficient manner, to the extent that commercial considerations will allow.

The flotation of a company does not automatically give rise to a capital gains tax charge in the hands of the shareholders. However, the flotation will generally increase the value of shares held and therefore some planning before the flotation may enable the shareholders to arrange their affairs so as to minimise later tax charges and to allow them to make transfers at lower tax cost, or to ensure that they maintain certain reliefs which have accrued.

Gifts of shares

Shareholders may wish to provide shares to others, taking advantage of the increase in value on flotation to make the gift more valuable. The key here is to ensure that