* indicates required

How to ensure your business remains 100% free of Inheritance Tax

Sponsored article


DO YOU run a successful business which is no longer 100% free of Inheritance Tax asks Tony Byrne, managing director of Wealth & Tax Management?  Did you even know your business was outside the scope of IHT in the first place?  Have you inadvertently become a victim of your own success?

If you have owned a SME trading business for more than two years then your ownership qualifies for 100% business relief which means that your business escapes IHT on your death unless it no longer qualifies 100%.

You see, if your business is successful and you build surplus funds which are in excess of what you could possibly need to run your business. In other words, the surplus is more than the working capital needs of the business  then this excess amount is no longer classed as part of the trade.

That element has become an investment rather than a trade and an investment company does not qualify for business relief.

Let me explain this with an example:  You create a business and build it to such a level that the trade and its business assets are now worth £2.5 million. Over the years you have reinvested surplus cash into a number of investment properties owned by the company worth £2 million and the company has a deposit account balance of £500,000. This means that 100% business relief from IHT is only given on 50% of the total business value of £5 million because only the valuation of the £2.5 million trading element of the business qualifies for business relief against IHT.

So how do you overcome this? A simple solution is to invest the company’s surplus funds into business relief qualifying investments. Do this and after two years the entire business becomes 100% free of Inheritance Tax again.

To discover to make your business more tax-efficient,  take advantage of a one-hour Discovery Meeting either at our offices or by a video conference call at our expense worth £270 to each of the first three readers who contact us before April 30 2023. You know it makes sense. We offer a great cup of coffee too. Ring us on 01908 523740 or for free on 0800 980 4516 or email wealth@wealthandtax.co.uk and quote Apr2023 offer to book your free discovery meeting.

RISK WARNING: These products will not be suitable for all investors and you may lose capital. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount invested.  The tax implications of advice will be based on your individual circumstances, tax legislation and case law as well as regulations which are subject to change. You should always seek tax advice from a taxation specialist in order to understand your options. This article is based on my own observations and opinions.

More from Milton Keynes:

More wealth management articles: