Definition
Company shares are units of ownership in a business that represent your stake in the company and form part of your estate when planning your will.
Understanding company shares matters because you can't automatically leave them to whoever you want—transfer restrictions in the company's constitutional documents control who can inherit them.
What Do Company Shares Mean?
Under the Companies Act 2006, company shares represent units of ownership in a company's share capital. Shares are personal property that give you voting rights, dividend entitlements, and a stake in the company's value. When you own shares, you own a portion of that business. Private company shares (unquoted shares) differ from publicly traded shares, but all form valuable estate assets requiring special attention in your will.
You cannot automatically leave company shares to whoever you want. The company's articles of association and any shareholders' agreement control who can own shares. These documents typically include pre-emption rights—existing shareholders must be offered the shares first at fair value. Sarah owns 40% of a family business worth £600,000 and wants to leave her £240,000 stake to her daughter Emma. However, the shareholders' agreement requires shares to be offered to her business partner first. If exercised, Emma inherits £240,000 cash instead of shares. Constitutional documents override your will.
Company shares may qualify for Business Property Relief, potentially reducing or eliminating inheritance tax. Unquoted shares receive 100% relief on the first £1 million (from April 2026), then 50% relief above that. David owns 100% of a private engineering firm worth £2.5 million. Under April 2026 rules, inheritance tax drops from £1 million to £300,000—saving his children £700,000. To qualify, the company must be a trading business and you must have owned shares for at least two years.
Common Questions
"Can I leave my company shares to anyone I want in my will?" Not always. The company's articles of association and any shareholders' agreement control who can own shares. These documents often include pre-emption rights requiring shares to be offered to existing shareholders first, or may restrict transfers to family members only. You must check these constitutional documents before planning your will.
"What happens to my company shares if I die without a will?" Your shares pass under intestacy rules to your closest relatives, but the company's articles of association may still restrict who can actually become a shareholder. The company directors may have the power to refuse registration of the transfer, potentially forcing a sale at fair value instead of allowing your relatives to become shareholders.
"Are company shares exempt from inheritance tax?" Company shares may qualify for Business Property Relief (BPR), which can provide 100% relief from inheritance tax on unquoted company shares and 50% relief on AIM-listed shares (from April 2026, subject to a £1 million combined allowance). The company must be a trading business, and you must have owned the shares for at least two years before death.
Common Misconceptions
Myth: "I own the shares, so I can leave them to whoever I want in my will"
Reality: The company's articles of association and any shareholders' agreement control who can own shares and take precedence over your will. Common restrictions include pre-emption rights (existing shareholders must be offered the shares first) and director approval requirements. Your beneficiaries may receive cash from a forced sale rather than the shares themselves.
Myth: "My family will automatically inherit my shares and become involved in running the business"
Reality: Inheriting shares doesn't automatically mean inheriting management control or even becoming a registered shareholder. Many shareholders' agreements include compulsory transfer provisions requiring shares to be sold to remaining shareholders upon death. Additionally, shareholding and management are separate—your family might inherit shares but have no right to participate in day-to-day operations unless they hold executive positions.
Related Terms
- Shareholders' Agreement: Private contracts controlling share transfers through pre-emption rights and compulsory transfer provisions.
- Share Valuation: Determines share value for probate and inheritance tax purposes.
- Controlling Interest: Shareholdings over 50% giving control over company decisions.
- Business Property Relief: Inheritance tax relief providing up to 100% relief on qualifying business shares.
Related Articles
- Business Assets vs Personal Assets in Your Will: UK Guide
- Sole Traders and Wills: Protecting Your Business
- How to Value Your Business for Your Will: UK Guide 2025
- Business Succession Planning in Your Will: A UK Owner''s Guide
- What Happens to Your Business When You Die?
Need Help with Your Will?
If you own company shares, planning how to pass them through your will is essential for protecting both your business and your family's financial future.
Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.
Legal Disclaimer:
This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.