We would like to understand whether we can implement alphabet shares in our company and the steps for this. We are a company of three partners: Lucas 60%, Anderson 20% and Jessica 15%. We do not have employees. However, we each receive the minimum salary. We are looking for each of us to receive a certain amount of money each month via alphabet shares, for example, Lucas £6,000, Anderson £6,000 and Jessica £4,000. 

Arthur Weller replies:  

It is certainly possible to implement alphabet shares in your company. However, the example you give is of Lucas receiving 37.5% of the dividends declared, Anderson receiving 37.5%, and Jessica receiving 25%. These are not the same percentages as their shareholding. Example 13 in HMRC’s Trusts Settlements and Estates Manual at TSEM4225 (tinyurl.com/44mvsckh), HMRC considers this to be a 'bounteous arrangement'. However, at the end of TSEM4220, HMRC states: ‘Where the person benefiting under the arrangement is not a spouse, civil partner or minor child the settlements legislation will not apply unless there are arrangements under which the money will be paid, or used to benefit the settlor (or spouse etc.).’