Family owned and managed businesses make a major contribution to the success of the British economy.
According to the Institute for Family Business (IFB), family businesses account for a quarter of the UK’s gross domestic product.
They employ nearly 12 million people and contribute £125 billion to the UK government in tax revenues.
Their latest research claims there are an estimated 4.6 million family businesses in the UK, making up 87% of all private sector firms.
IFB director general Mark Hastings said:
“Family business is the backbone of our economy. This new research reveals just how vital family business is for the UK economy and the scale of the contribution it makes to employment and government revenues.”
Family business owners are often concerned about the impact of inheritance tax on their succession planning.
In some cases, it may be possible to avoid inheritance tax altogether through the use of Business Property Relief.
Business Relief reduces the value of a business or its assets when working out how much inheritance tax has to be paid.
You can get Business Relief of either 50% or 100% on some of an estate’s business assets, which can be passed on while the owner is still alive or as part of the will.
Business Relief at 100% is available on a business or interest in a business, or shares in an unlisted company.
The Relief is available at 50% on shares controlling more than 50% of the voting rights in a listed company; land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled; or land, buildings or machinery used in the business and held in a trust that it has the right to benefit from.
In both cases, you can only get Business Property Relief if the deceased business owner owned the business or asset for at least two years before they died.
Claiming Business Property Relief involves completing the inheritance tax account form IHT400 and the business or partnership interests and assets schedule IHT413.
If you have any questions about Business Property Relief or inheritance tax planning in general, please call me on 01483 274566 or email shelley@icfp.co.uk.
[tweet_box]Family business owner? This is how you can reduce inheritance tax for the next generation.[/tweet_box]
