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Declaring profits after the death of an investment company shareholder

Guidance on how to declare attributed profits in the event of a death of an investment company shareholder with three step-by-step examples.

​Rule

If there is a complete financial period ending before the date of death then the deceased’s share of the relevant profits must be declared on the deceased’s personal tax return for the period 1 January to the date of death.

If there is not a complete financial period ending before the date of death then the deceased’s share of the relevant profits to the date of death must be declared on an estate tax return and will be taxed on the executors and administrators and will be a debt due and payable out of the deceased’s estate.

The remaining relevant profits for the period from the date of death to the financial period end must also be declared on an estate tax return and will also be taxed on the executors and administrators and will also be a debt due and payable out of the deceased’s estate. However, the quantum of the assessment shall not include any share of the relevant profits attributable to a non resident beneficiary.

When the ownership of the ordinary share capital has been transferred to the individual beneficiaries so that they are now the registered shareholders, the Jersey resident individual beneficiaries will then be personally taxed on any subsequent attributed relevant profits.

Investment company shareholder death: Example 1

1 Investments Limited

Financial year ended 31 December 2009​ ​
Relevant profit for the financial year £12,000
Preference dividend £0
Dividend paid £0

Synopsis:

  • Mr A owned 12 shares, being 100% of the issued ordinary share capital
  • Mr A died on 31 March 2009
  • Two Jersey beneficiaries share in the estate equally: Mr B and Mr C
  • The shares are transferred to Mr B and Mr C so that they are now the registered shareholders on 1 January 2010

Relevant profit per ordinary share year ended 31 December 2009

This is calculated by dividing the relevant profit by the number of shares

Relevant profit divided by number of ordinary shares ​
£12,000/12 shares £1,000 

Share of attributed profit applicable to Mr A deceased

This is calculated by multiplying the number of days by the number of shares.

(Number of days in which shares held x number of shares held x amount per share)
divided by number of days in financial period ​
(90 days x 12 shares £1,000) /365 days£2,959 

Executor declares £2,959 on an estate tax return.

Share of attributed profit applicable to each Jersey resident beneficiary

  • Mr B is deemed to own 6 shares
  • Mr C is deemed to own 6 shares
Mr B​ ​ ​
Period 1 April 2009 to 31 December 2009 = 275 days(275 days x 6 shares x £1,000) /365 days £4,520 
Mr C​ ​ ​
Period 1 April 2009 to 31 December 2009 = 275 days(275 days x 6 shares x £1,000) /365 days £4,521 
Profit share​ ​
Mr B share £4,520 
Mr C share £4,521 
Total £9,041 
Executor declares £9,041 on an estate tax return.

Investment company shareholder death: Example 2

2 Investments Limited

Financial year ended 31 March 2009​ ​
Relevant profit for the financial year £10,000 
Financial year ended 31 March 2010
Relevant profit for the financial year 
£12,000 
Preference dividend £0 
Dividend paid £0 


Synopsis:

  • Mr A owned 12 shares, being 100% of the issued ordinary share capital
  • Mr A died on 30 September 2009
  • Two beneficiaries share in the estate equally; Mr B and Mr C
  • The shares are transferred to Mr B and Mr C so that they are the registered shareholders on 31 March 2010

Share of attributed profit applicable to Mr A deceased

Executor declares attributed profit of £10,000 on Mr A's 2009 tax return to date of death

Relevant profit per ordinary share year ended 31 March 2010

This is calculated by dividing the profit by the number of shares

Relevant profit divided by number of ordinary shares​​
£12,000 /12 shares £1,000 

Share of attributed profit applicable to Mr A deceased

The calculation is:

(Number of days in which shares held x number of shares held x amount per share)
divided by number of days in financial period​
(182 days x 12 shares x £1,000) /365 days £5,984 

Executor declares £5,984 on an estate tax return.

Share of attributed profit applicable to each Jersey resident beneficiary

  • Mr B is deemed to own 6 shares
  • Mr C is deemed to own 6 shares
Mr B​ ​ ​
Period 1 October 2009 to 31 March 2009 = 183 days (183 days x 6 shares x £1,000) /365 days£3,008 
Mr C​ ​ ​
Period 1 October 2009 to 31 March 2009 = 183 days (183 days x 6 shares x £1,000) /365 days £3,008 
Profit share​​ ​
Mr B share £3,008 
Mr C share £3,008 
Total £6,016 

Executor declares £6,016 on an estate tax return.

Investment company shareholder death: Example 3

3 Investments Limited

Financial year ended 31 December 2009 ​
Relevant profit for the financial year £12,000 
Preference dividend £0 
Dividend paid £0 

Synopsis:

  • Mr A owned 12 shares, being 100% of the issued ordinary share capital
  • Mr A died on 31 March 2009
  • Three beneficiaries share in the estate equally
  • Two Jersey resident beneficiaries, Mr B and Mr C
  • One UK resident beneficiary, Mr D
  • Four ordinary shares transferred to Mr B on 1 November 2009

Relevant profit per ordinary share year ended 31 December 2009

The relevant profit is divided by number of ordinary shares

Relevant profit divided by number of ordinary shares ​
£12,000 /12 shares £1,000 

Share of attributed profit applicable to Mr A deceased

(Number of days in which shares held x number of shares held x amount per share)
divided by number of days in financial period ​
(90 days x 12 shares x £1,000) /365 days £2,959 

Executor declares £2,959 on an estate tax return.

Share of attributed profit applicable to each Jersey resident beneficiary

  • Mr B is deemed to own 4 shares
  • Mr C deemed to own 4 shares
Mr B​ ​ ​
Period 1 April 2009 to 31 October 2009 = 214 days(214 days x 4 shares x £1,000) /365 days £2,345 
Mr C​ ​ ​
Period 1 April 2009 to 31 December 2009 = 275 days(275 days x 4 shares x £1,000) /365 days £3,014 
Profit share​ ​
Mr B share £2,345 
Mr C share £3,014 
Total £5,359 

Executor declares £5,359 on an estate tax return.

Mr B’s share of attributed profit when shares transferred to him

Four shares transferred to Mr B on 1 November 2009

Profit on Mr B's shares​ ​
(61 days x 4 shares x £1,000) /365 days £668 
Mr B declares £668 on his personal 2009 tax return. ​
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