Can my unmarried partner own shares in my company and receive dividends?

Yes. An unmarried partner can own shares and be paid dividends taxed as their own income, but the exemption that protects outright gifts between spouses does not cover you. HMRC's guidance on partnerships says the settlements legislation does not apply to someone who is not a spouse or civil partner unless the property can revert to the giver or their spouse, so the risk lies in arrangements that bring the money back to you.

Why people ask

Many couples are not married. One of them runs a company, the other has unused allowances, and shares look like an easy way to use them. The rules are different from a married couple's in a few important places.

What stays the same

A person who is given shares owns them and is taxed on the dividends. The tax rules on settlements are aimed at someone who gives away income but keeps a benefit from it. HMRC's partnership guidance sets the test for someone who is not a spouse or civil partner: the rules do not apply unless there are arrangements or conditions under which the property can revert to the giver or their spouse.

What is different

• The outright gift exemption is for spouses and civil partners. You cannot rely on it, so the facts of the whole arrangement carry more weight (TSEM4210).
• Capital Gains Tax. The gift is treated as a sale at market value.
• Inheritance tax. A gift to a partner who is not a spouse is not exempt, and a transfer can fall into the seven-year rules.
• Marriage Allowance needs a marriage or civil partnership.

Keeping the gift clean

• Give ordinary shares with dividend, voting and capital rights, not a bare right to income.
• Make the gift unconditional, with nothing that returns the shares to you.
• Pay dividends to your partner's own bank account.
• Record the gift in a stock transfer form and the share register.

If the relationship ends

Unlike spouses, unmarried partners have no automatic route to divide assets. A shareholder keeps their shares, so a shareholders' agreement should say what happens if you separate. For the married position, see what happens to a spouse's shares on divorce.

If your partner does real work, pay them properly for it, and see making a partner a director for how HMRC treats pay for little work.

Sources: HMRC manual TSEM4215: settlements legislation and partnerships · HMRC manual TSEM4205: outright gifts between spouses · HMRC manual TSEM4210: look at the whole arrangement · GOV.UK: High Income Child Benefit Charge