They are not illegal, but HMRC do not really like ‘alphabet shares’ (where there are several different classes of shares issued). It has been argued that these shares merely give a “right to income” and don’t represent ownership of the Company.
Some years ago, there was a court case (Arctic Systems), in which HMRC wanted a wife’s dividends to be taxed on her husband because he, effectively, earned the money and then gifted it to her. HMRC lost the case but it led to draft legislation to stop so-called “income shifting”. This was subsequently cancelled when the financial crash occurred.
If it is resurrected, perhaps under a Labour government, these ‘alphabet share’ classes could again be in the firing line.
But…different accountants give different advice!