My client is a 90 year old individual who wishes to invest funds into the family company. He wants to know whether these funds will attract business property relief; and if so how he should structure the investment and how long he will need to wait before he becomes entitled to the relief.
Answer
To attract business property relief it is of course imperative that the family company is mainly a trading company not an investment company. A company which is ‘wholly or mainly’ one of holding investments cannot qualify for the relief (IHTA 1984 s 105(3)). This being the case the use to which the funds will be put within the company must then be reviewed. There are two issues here.
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My client is a 90 year old individual who wishes to invest funds into the family company. He wants to know whether these funds will attract business property relief; and if so how he should structure the investment and how long he will need to wait before he becomes entitled to the relief.
Answer
To attract business property relief it is of course imperative that the family company is mainly a trading company not an investment company. A company which is ‘wholly or mainly’ one of holding investments cannot qualify for the relief (IHTA 1984 s 105(3)). This being the case the use to which the funds will be put within the company must then be reviewed. There are two issues here.
...
If you are not a subscriber, subscribe now to read this content.
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