Protecting a Business from Inheritance Tax

When you die, your estate could be subject to Inheritance Tax (IHT). For those people who own businesses in which friends and family work, it could mean that those closest to you could be left without a livelihood if the business has to be sold to pay IHT.

Whether you are looking to sell the business as you retire or wish to plan for future growth, our wills, trusts and estate planning team is here to work closely with you to ensure your objectives are met in the most tax-efficient and commercial way.

To speak to a solicitor about IHT and how it could affect your business, get in touch by calling us on 0345 872 6666 or by filling in our online enquiry form and requesting a callback. 

How to Claim Inheritance Tax Relief

IHT is charged at a rate of 40%, which can have a substantial impact on a business. However, if you own a business or assets that are used by a business that you are involved in, you may be able to claim relief from IHT at either 50% of 100% on the value of the business or assets. To qualify for the relief:

  • The business must have been owned by you, or had interest from you, for at least two years
  • The business must be an unquoted business that is wholly or mainly a trading business
  • There must not be an automatic contact for sale on the death of a shareholder contained in the articles associated with shares of the business

If the relief is being claimed for an asset owned outside of the company but used by the company, for example, if you own the building the business operates from, then the asset must be or partially be an unquoted trading business and must be controlled by the person owning the asset or be a partner in the business.

For information on IHT relief for a property, please visit our dedicated page.

Our team will help you understand where you stand and your options for reducing IHT for your business. 

Exemptions to Inheritance Tax Relief

Unfortunately, not all companies qualify for IHT relief. The most common type of business that does not qualify under this definition is a business that runs a buy-to-let portfolio. If your business is part trading and part investment property service, relief from IHT may be denied on the whole value. It is important to structure the business correctly to ensure that you do not lose what could be a 100% relief.   

Why Choose JMW?

The law surrounding IHT can be incredibly complex. Our team will provide pragmatic advice without technical legal jargon, so you can make a comprehensive decision about your business to ensure it is safeguarded when you die. We can help you put strategies in place to ensure that your business can thrive for many years to come.

We liaise with accountants, investment managers, private banks and financial advisers to ensure we offer you the best possible legal guidance and have helped numerous clients from different backgrounds, so you can rest assured we are well equipped to help. 

Talk to Us

For a better understanding of how IHT could affect your business and for advice on the strategies you can put in place, call us on 0345 872 6666 or fill in our online enquiry form and we will get back to you.

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