If you own your own business (or are a partner or shareholder in one), you may be wondering if you can pass that business or your shares on to family members without being hit by inheritance tax.
Some business assets are not liable to UK inheritance tax. Inheritance tax relief is applicable to sole trader businesses, an interest in a business, unquoted shares, shares traded on the Unlisted Shares Market or the Alternative Share Market and unlisted securities which give the owner control of the company.
Business Property Relief is 100% of the value of the property or business, if it has been owned for at least two years prior to your death. Note that Business Property Relief is limited to 50% on listed shares which give control of the company, and land, buildings, plant or machinery used (wholly or mainly) in the business.
There are instances where Business Property Relief is not applicable. We would be happy to take a look at your unique set of circumstances and advise you accordingly.
Here are some other issues you need to consider when thinking about passing business interests on to family members:
Shareholders’ Agreements
These can give business partners, co-shareholders or family first refusal on purchasing your shares in the event of your death
Cross Option Agreements
These give your business partners or co-shareholders first refusal on buying your shares
Key Man Insurance
This pays out a lump sum, enabling your business partners or co-shareholders to purchase your interests
If you are sole proprietor of the business, it is a good idea to think about what should happen to the business after your death. Should the business continue in its current form? Do any family members have the skills, time and desire to continue it?
UK inheritance tax is a large and seemingly complicated area of the law. We can help demystify it and assist you with all matters relating to business and inheritance tax, making a will, power of attorney and probate in the UK.
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two thumbs up for the post!
this helps a lot thanks!
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Keyman Insurance