Inheritance Tax- Business Relief?

Gotjack

Im confused with regards to whether a transfer within the family is taxable in terms of inheritance tax.

I assumed a PET to sons and daughters would mean the usual 7 year rule, however i have just discovered this on the HRMC website



Does this mean a parent could transfer his business to children, and not be charged inheritance tax (as long as he lived 2 years- rather than the normal 7)

????

EDIT- im not allowed to post links, but essential the search was inheritance tax business relief on google, and you can find out about it

Any

BPR is not a out when you die-but about how long you owned the business. That must be two years.
You can just give it to him in your will and BPR will still apply.
However if you gift it to him before,he must still have it on the date of your death to get the relief.
And also consider capital gains tax.

taxing

Any wrote: »

BPR is not a out when you die-but about how long you owned the business. That must be two years.
You can just give it to him in your will and BPR will still apply.
However if you gift it to him before,he must still have it on the date of your death to get the relief.
And also consider capital gains tax.

Agreed

Basically the gift, in lifetime, is still a PET but one where, potentially, BPR (Business Propery Relief) might apply if the PET fails in the 7 year period. As said, the recipient must still have the asset(s) subject to the gift and these must still be able to qualify under the rules (so still a business). Alternatively, and if he has sold them, then replacement property could qualify but only to the extent of the value of the original transfer.

Any gift you make is also a disposal for capital gains tax. Even though you don't get any cash (cause it's a gift) it is deemed to be a disposal at full market value - that is at the price a willing buyer would pay to a willing seller. You can't reduce the value by saying nobody would want to buy although discounts are available in some circumstances (minority shareholdings; joint property ownership etc).

Where you gift a business, or business interest, you can elect to pass the gain on to the recipient of the gift. Essentially, they get the gift at price it cost you so later, when they sell, they get the gain you would have had, and also then their own gain on top (assuming the asset contiues to grow in value after the gift).

If it isn't a business asset then you may have a capital gain. If it's land you can usually elect to pay the tax in instalments.

Regards