IHT - shares in a family company.

Should parents' shares be transferred to son?

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Mum, dad and son own 1 share each. Mum and dad will leave their share to surviving partner.

On first death will they receive 100% or 50% business proprty relief for IHT. If only 50%

should they both trasnsfer shares to son now?

Replies (4)

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By Duggimon
23rd Mar 2017 12:37

Is inheritance tax the only concern in deciding who owns and controls the company?

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paddle steamer
By DJKL
23rd Mar 2017 12:52

So transfer to son, son has say a terrible marriage,divorce happens and he is then scrambling around for cash to pay ex wife so that he can keep family business in family(as whole business now his so say taken into account re dividing assets)

As Duggimon indicates , do not let the tax tail wag the business dog, legal advice would be sensible if significant sums involved(lets face it if IHT is a concern likely significant sum is involved)

Meanwhile ageing parents, thinking business might have given them a bit of income in retirement, directors fees/similar as they advance into their dotage, find it has no excess cashflow ,as son needs it all to fund payout to ex wife, and business was their "pension"

101 other perms are possible, e.g son could be an idiot and wreck business etc, "clogs to clogs in three generations"

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By gbuckell
23rd Mar 2017 14:18

If the company is trading with no excepted assets (e.g. surplus cash) then the shares should qualify for 100% BPR so IHT should not be a driver in deciding whether to give shares to son.

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By Duggimon
23rd Mar 2017 14:36

If avoiding inheritance tax is the only issue in point then the parents would be wise to transfer both shares along with all money and possessions to the son now and go and live in a bin for seven years, that done they're free and clear and can shuffle off this mortal coil tax free.

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