We have a client situation where a family business is looking to be passed on to the next generation. The trading business itself is worth around £400,000 in the current market.
Within the limited company, there are cash deposits of around £400,000 (coincidently). These are held in deposit accounts within the company.
The owners of the company are looking to gift their entire shareholding to the next generation. We are concerned that the (relatively) large reserves of cash could cause issues for gift-relief if it was considered to be a "non-trading" element.
What are views on this?
The workaround currently being considered is to invest the surplus cash in a Furnished Holiday Let. As this is considered to be a trade would this alleviate the issues (should there be any)? The furnished holiday let is in no way connected to the current trade of the company.
Thanks in advance.