Whether you run a business as a Sole Trader, own shares in a private limited company or have an interest as a Member or Partner in an LLP or Partnership, there are some valuable Inheritance Tax reliefs that are currently available.
Called Business Property Relief (BPR), in the right circumstances BPR provides 100% relief from Inheritance Tax on the value of your business interests.
IHT is payable at 40% on your taxable estate and you can immediately see that this is a huge saving which is obviously important for the welfare of your family.
There are some conditions attached to the availability of these reliefs and so specialist advice and a properly drafted Will is vital.
Without special provision being made in the Will, BPR can be unnecessarily diluted or, more usually, completely wasted.
I will spend time getting to understand your business and liaise with your Accountant and other relevant professionals.
If you are a farmer, there is Agricultural Property Relief. APR has its own host of rules which most farmers are well aware of and again, a properly drafted Will and specialist advice is vital.
As well as a protective and tax efficient Will, business owners should think about what the effect on the business would be if they suddenly lost capacity. Would business decisions be stifled or impossible? Could the business even continue to run?
Do you have a Shareholders or Partnership Agreement? Does it provide for a loss of capacity? Who would make decisions in your place?
Although they can’t cover every decision, a Business LPA can appoint someone different to your personal LPA to make decisions about the business in your place.
Preparing Wills and Business LPAs usually brings us on to talk about succession planning for your business. What would happen to the business if you died? Would it be sold? Could your fellow shareholders afford to buy you out?
Even if that is long in the future, it is a good idea to ensure that your Shareholder or Partnership Agreements work in conjunction with your Wills and that your Shareholder or Keyman Insurance is properly protected in Trust with a Cross-Option Agreement.
The use of all these need careful thought and I am experienced in working with business owners, their accountants and financial advisers to ensure that your business and its value is protected in the event of your death, whilst still being there to benefit your family.
I have compiled a selection of frequently asked questions. If you have any questions that I haven’t covered, please get in touch and I’ll be happy to help.
People often say that getting started is the hardest part of all. Because you are reading this, you should feel encouraged that you have already begun the process, and my job is to help you from here. Simply pick up the phone and call me or drop me a short email.