Succession planning for family business
Inheritance Tax (IHT) planning is essential if you intend to pass your business to younger generations. The most important IHT reliefs are Business Property Relief (BPR) and Agricultural Property Relief (APR). A review of commercial property assets can check if these reliefs are available for you.
If you are a controlling shareholder in a family trading business, then if the shares qualify for BPR, their value will be IHT free. But if you own business premises personally, the land value is only 50% sheltered by BPR. Worse still, if you do not control the company with your own shareholding then your land gets no IHT relief at all. IHT planning requires careful consideration of land ownership and many other factors, including Stamp Duty Land Tax, and checking that the company continues to qualify for BPR as its activities evolve.
You may decide to transfer some of your shares directly to a younger generation, or you may decide that discretionary trusts could be a useful part of your planning. Gifts of assets require consideration of Capital Gains Tax as well as Inheritance Tax. We balance your future tax savings against immediate practical issues.