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Passing the torch

Guy Abrahams explains how to maximise inheritance tax relief on a family business and simultaneously address the problem of succession

26 May 2015

The 40 per cent inheritance tax charge for an estate above the nil rate band inevitably focusses clients' minds on the issue of succession; when considering long-term planning for a family, it remains as crucial a factor as anything else.

Here I will set out (in simple terms) two ways families can use companies to reduce their inheritance tax liability, as well as how they can address succession issues along the way.

Unlocking inheritance tax relief in the family business

Many clients already own their family business through a private company so they will, at some point, need to think about the inheritance tax treatment of its shares. The shares will escape inheritance tax only if the company's business is predominantly based on trading,
as opposed to investment.

Given the value of this relief, ...

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