insideKENT Magazine Issue 86 - May 2019 | Page 169

BUSINESS
IHT planning:
Handing over
the family
business
by Rick Schofield, Partner at Wilkins Kennedy Ashford
MANY BUSINESSES ARE HANDED DOWN THE GENERATIONS AND CAN
ACT AS A GREAT LEGACY, AS WELL AS JOB SECURITY, FOR FAMILIES
PAST, PRESENT AND FUTURE. HOWEVER, IN ORDER TO MAKE THE MOST
OF YOUR SUCCESSION PLANNING, IT IS ALSO WORTH GIVING SOME
THOUGHT TO INHERITANCE TAX (IHT) – AND AVOID LOOKING AT YOUR
OPTIONS AT THE LAST MINUTE.
Plan ahead
IHT can be significantly reduced through
planning ahead, especially as some options
require action at least seven years prior to death.
Not only does this help with clarity, it can also
lead to significant cost savings. Business Property
Relief, for example, can extinguish the full IHT
rate of 40% in some circumstances.
Perhaps more importantly, planning ahead can
help mitigate any hard feelings among family
and avoid any emotive or complex issues that
may arise out of making last-minute decisions.
Remember that navigating the tax minefield,
and understanding different tax implications
themselves, can take time. It is important that
you and your family can take time to consider
any big decisions.
Family values
If you are considering handing over your family
business, you should first get an idea of how
much it is worth – this is something our specialist
business valuation team at Wilkins Kennedy can
help out with. You should always ask an expert
to help you with this, because it can be difficult
to separate any family value your property has,
over any residual value. There can be a number
of complexities associated with valuing a business
– so seek advice from those in the know. Make
sure you find someone who understands your
business and has detailed knowledge of the
market.
Contact Us
Every situation is different and I would strongly recommend
that you seek professional advice before acting. Contact the
tax team at Wilkins Kennedy to see how we can help.
To your relief Local offices:
If you have physical premises, such as a B&B
for example, this is categorised as a business
asset and therefore attracts Business Property
Relief at a rate of 50% in the event of the owner’s
death – but only if certain conditions apply.
However, if the B&B is held via an unquoted
limited trading company and shares have
been held for two years then 100% Business
Property Relief will be due, i.e. there will be no
IHT payable on the business. Ashford: 01233 629 255 / Canterbury: 01227 454 861
It is important to note that IHT relief will be
due if assets are gifted before death, as long as
the donor has held the assets for two years before
the point of gifting. Relief will only be due if the
beneficiary is holding the assets as a going
concern at the donor’s date of death. Any assets
or shares gifted more than seven years prior to
death will be completely exempt from IHT.
Maidstone: 01622 690 666 / Orpington: 01689 827 505
Sandwich: 01304 249 997
[e-mail]
www.wilkinskennedy.com
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