Using trusts as part of the ownership strategy for family businesses can enable succession planning while providing flexibility asset protection and an ability to keep the voting block held together by trustees acting in the best interests of the family as a whole. However trusts are only likely to be appropriate for family businesses that are mainly trading within IHTA 1984 s 105(3). If the shares do not qualify as relevant business property for IHT purposes IHT is payable at 20% on entry into trust above any available nil rate band. Provided business property relief (BPR) applies that entry charge can be reduced to nil where BPR applies at 100% but it is essential that the activities of the company are assessed in advance and BPR clearance obtained where appropriate. A transfer into trust can avoid an upfront CGT charge by claiming holdover relief under TCGA...
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Using trusts as part of the ownership strategy for family businesses can enable succession planning while providing flexibility asset protection and an ability to keep the voting block held together by trustees acting in the best interests of the family as a whole. However trusts are only likely to be appropriate for family businesses that are mainly trading within IHTA 1984 s 105(3). If the shares do not qualify as relevant business property for IHT purposes IHT is payable at 20% on entry into trust above any available nil rate band. Provided business property relief (BPR) applies that entry charge can be reduced to nil where BPR applies at 100% but it is essential that the activities of the company are assessed in advance and BPR clearance obtained where appropriate. A transfer into trust can avoid an upfront CGT charge by claiming holdover relief under TCGA...
If you are not a subscriber, subscribe now to read this content.
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