The recent COVID-19 crisis has focussed many people’s minds on planning for the future.
Business Relief can significantly reduce the value of a business or its assets when working out how much Inheritance Tax has to be paid.
Any ownership of a business, or share of a business, is included in the estate for Inheritance Tax purposes, but families can benefit from Business Relief of either 50 per cent or 100 per cent on some of an estate’s business assets, which can be passed on while the owner is still alive or bequeathed in a Will.
There are many reliefs for IHT purposes. They include:
- Business Property Relief – 100% relief for business assets including an interest in a business, a controlling interest comprising unquoted shares including AIM listed shares, and unlisted shares in a private company.
- A controlling interest in a listed company – 50% relief.
- Certain personal assets used in a business – 50% relief.
- Additionally, there are other, smaller reliefs that can be claimed:
- An annual exemption of £3,000. An unused allowance can be carried forward for one year.
- Small gifts exemption of £250 per person.
- Gifts on a marriage or civil partnership: £5,000 from a parent, £2,500 from a grandparent, £1,000 others.
Gifts to an individual within the nil rate band, and with no strings attached, may still be made without any charge to IHT if the donor lives for 7 years after making the gift.
Changes to the taxation of trusts and non-domiciled persons have complicated IHT planning in recent years.
If you haven’t considered your options recently we recommend a review.
Get in touch with us and out expert team will arrange a full review of your tax situation and suggest how you could minimise your IHT liabilities.