For successful business clients Business Property Relief is one of the most important reliefs on the statute book. By using it the value of business property for gift or inheritance tax purposes can be reduced by up to 90%. This can enable valuable business assets to pass to a business owner’s successors without the crushing burden of tax that would otherwise arise.
Typical Problems that we come across
Where the property passing to an owner’s successors consists of shares in a company, the successful use of Business Property Relief will involve negotiating two major hurdles. First the shares must comprise relevant business property.
Secondly the proportion of the value of the shares that derives from what is known as excepted and excluded assets, will not qualify for relief. Often taxpayers will focus on the first test and will not pay sufficient attention to the second. Identifying excluded assets can sometimes be tricky and where the assets are valuable a significant amount of relief can be lost.
How We Can Help
Very often it takes more time to take the action necessary to maximise Business Property Relief than business-owners realise. We will analyse the business assets between qualifying and non-qualifying assets and consider how the relief can be maximised. Following this we will discuss the position with the business-owner and put a plan in place to achieve the relief envisaged.