Inheritance Tax and LLP

Robmythoughts

Hi guys, first time poster here.

So my mum and her parents are 3 equal partners in the family business LLP.

Both my grandparents are in ill health at the moment and are very concerned whether my mum will have to pay inheritance tax on their share of the business when they die.

Originally my family were informed by their solicitor that when a member in a LLP dies and the other partners are the beneficiaries in that partners will, then they won't b liable to inheritance tax. Instead, the deceased partners share will simply be distributed evenly amongst the existing partners.

However, they recently got a new solicitor who has scared them by saying that this isn't the case and as soon as one partner dies then the remaining partners will be forced to pay inheritance tax on the deceased partners share. Which, by no means, can my family afford. So will be forced to sell the business.

A little background is that the the assets of the business (mainly property) are valued at approx £400k and the LLP has existed for nearly 10 years.

Can anyone possibly provide some advice for the scenarios of; one and both of my grandparents passing away and the effects on the family business tax-wise?

Many thanks for your time!

robmythoughts

g6jns_2

Robmythoughts wrote: »

Hi guys, first time poster here.

So my mum and her parents are 3 equal partners in the family business LLP.

Both my grandparents are in ill health at the moment and are very concerned whether my mum will have to pay inheritance tax on their share of the business when they die.

Originally my family were informed by their solicitor that when a member in a LLP dies and the other partners are the beneficiaries in that partners will, then they won't b liable to inheritance tax. Instead, the deceased partners share will simply be distributed evenly amongst the existing partners.

However, they recently got a new solicitor who has scared them by saying that this isn't the case and as soon as one partner dies then the remaining partners will be forced to pay inheritance tax on the deceased partners share. Which, by no means, can my family afford. So will be forced to sell the business.

A little background is that the the assets of the business (mainly property) are valued at approx £400k and the LLP has existed for nearly 10 years.

Can anyone possibly provide some advice for the scenarios of; one and both of my grandparents passing away and the effects on the family business tax-wise?

Many thanks for your time!

robmythoughts

Is the new solicitor a specialist in IHT planning and LLPs? The three partners need ugent paid for professional advice from a specialist in the field. Without detailed knowledge of all the circumstances further advice is impossible.

Crabapple

Echoing g6 - business assets and IHT are complicated, you need to get some specialist advice.

Robmythoughts

Thanks guys. I have confirmed with them that they're currently not using a specialist. I'll get onto it

getmore4less

If the business is only worth around £400k will there be any IHT?

The parents have £650k worth of nill rate band to play.

Probably worth a rummage around the HMRC site to get a basic understanding of how business assest get treated for IHT

TRy following this link

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm25094.htm


this may be of particular interest
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm25120.htm