Never assume your business interests will avoid Inheritance Tax.
Many major shareholders and business owners Relief, some of which can leave their estate at risk of a very large and unexpected Inheritance
tax relief afforded to business owners. Unlike ensuring that on the death of a business owner, the business itself does not need to be sold or
has to be paid. In practice, most business exemption.
Relief only applies to relevant business property, excluded. Given the potential value of this relief, it is essential that business owners understand where the boundaries lie.
asset will be an excepted asset if it was neither:
• Used wholly or mainly for the purpose of the business for two years immediately before the transfer (most commonly death or gift into a discretionary trust*), nor;
future use of the business.
This is perhaps best illustrated through an example. Philip is a 50% shareholder of XYZ from inception, in 2011, and estimates the total
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shareholding therefore has an estimated value of £1.5 million.
value of his £1.5 million shareholding will be accumulated £700,000 of cash, which is retained by the business. It is a sum which has been steadily increasing and there are no plans for the business to use these monies either now or likely to be an excepted asset and, as Philip has a 50% shareholding, £350,000 of his shares in
build up in the company bank account because they want to avoid paying higher rates of Income Tax on any money they take from the that, if a business holds cash that is not used
Relief where it can be shown that the cash is being retained for future investment in the it is best to obtain professional advice, especially while you are still able to put things right.
Please visit my website or contact me to receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning.
Scott Symes 01202 951227 07885 899742
scott.symes@
sjpp.co.uk www.scottsymeswm.co.uk
* Trusts are not regulated by the Financial Conduct Authority.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
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