Last updated: 14 October 2026
Can a child under 18 be a shareholder in a company?
Yes. There is no minimum age to own shares in a UK private company, unless the company’s articles say otherwise. But a minor can’t be a director until they’re 16, and in practice shares are often held for them by a parent or a bare trust. The main tax issue is the settlements rule: if a parent gives shares to their own child under 18, dividends over £100 a year are taxed on the parent, not the child.
Key rules
| Point | Rule |
| Minimum age to hold shares | None, but contracts with minors can be voidable |
| Minimum age to be a director | 16 |
| Dividends from shares given by a parent | Taxed on the parent if over £100 a year (per parent) |
| Dividends from shares given by grandparents | Taxed on the child |
| Shares bought with the child’s own money | Taxed on the child |
The parental settlement rule
The rule stops parents moving income to their children to use their Personal Allowance and lower tax bands. If dividends from shares a parent gave exceed £100 a year, the whole amount is taxed on the parent. The rule stops applying from the child’s 18th birthday. Grandparents, aunts and uncles are not caught, as long as the parent didn’t provide the money.
Example
Isaac’s grandmother gives him 10% of the shares in her company when he’s 12. The company pays £6,000 of dividends a year on his shares. Isaac uses his £12,570 Personal Allowance, so pays no tax. If his father had given him the shares, the £6,000 would be taxed on his father at up to 35.75% in 2026/27.
Practical considerations
- A parent or trustee usually signs documents for a minor
- The child can’t vote alone until they’re old enough to understand the decisions
- Shares are a gift for IHT, and may qualify for business relief
- Gifting shares is a disposal for CGT, but holdover relief may apply to trading company shares
Using a trust
A bare trust holds the shares for the child, who becomes fully entitled at 18. Discretionary trusts give more control, but have their own IHT and income tax rules. For family companies, alphabet shares can let dividends be paid to different classes.
Children aged 16 and 17
They can be directors and employees, and paid a salary for real work. They’re still minors for the parental settlement rule.
HMRC’s view
HMRC looks closely at family company arrangements. Make sure gifts are real and properly documented, and dividends are paid in line with the company’s articles and shareholdings.
Common mistakes
- Parents giving shares to young children and not reporting the dividends on their own return
- Paying dividends only on a child’s shares when the articles do not allow different rates
- Not keeping a signed stock transfer form and updated register of members
Frequently asked questions
Can a baby own shares?
Yes, held by a parent or trust.
Do children need to file a tax return?
Only if their income exceeds allowances.
Is the £100 limit per child?
It applies per parent, per child.
Can a child sell the shares?
Only with legal support until they turn 18.
Related: employing family members, CGT relief on gifts and the wife resigning as a director.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with company structure and dividends. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
