Business Succession Planning –
- Ensuring the ongoing management and control of the business
- Ensuring the ongoing financial viability of the business
- Addressing the personal requirements of owners
- How will the transfer of ownership be funded?
- What are the Tax Considerations – CGT, GST, Stamp Duty
- How are business debts & personal guarantees dealt with?
- Maintain the equity of continuing owners
- Ensuring a smooth transition for all staff, family & investors
What is Business Property Relief (BPR)
BPR is an important and valuable inheritance tax relief, that can reduce the value of relevant business property, when it’s transferred either in life or death. Relevant business property includes certain business interests and assets used in a business. When BPR is available the rate of relief will either be 100% or 50%.
What Type of Businesses Qualifies for BPR?
- If a company operates a trading business, these assets generally qualify for “Business Relief” for IHT purposes at the rate of 100%.
- The company must carry on a trading business, as opposed to an investment business.
- if the shares are subject to a sale contract, no BPR is available. It is important to make sure that any shareholder agreement, providing for shareholders to purchase the shares of a deceased shareholder, does NOT result in a contract and loss of BPR.
- The shares must be privately owned and the shares unquoted, although an AIM listing is permitted.
What Type of Businesses Do Not Qualify for BPR?
BPR isn’t given for a business whose activities consist wholly or mainly in dealing with:
• securities, stocks, shares, land and buildings;
• making or holding investments, or
• excepted assets – these are assets which weren’t used wholly or mainly for the purposes of the business throughout last two years prior to the transfer (or since acquisition if more recent), or required at the time of transfer for the future use of the business. For example, if the shares of a company qualify for BPR and the company owns a house which is used solely for the benefit of a shareholder, the house would be excluded from the valuation.
If you own a buy to let property portfolio, it will generally be regarded as an investment business and therefore not qualify for BPR and will be fully taxable for both capital gains and IHT.
We can carry out a BPR analysis on your business to help you plan for the future, and to ensure you have the necessary arrangements in place to qualify for 100% of any available relief on the transfer of your business interests in life or death.