Business Relief reforms: What business owners need to know

Not just a finance topic, tax reform directly shapes how #founders and #leaders plan, protect and grow their businesses. Predictability and planning are essential to stability, especially when running an #SME or scaling business #SuccessionPlanning #BusinessResilience

When a business done for love becomes a tax trap. Inheritance tax can be devastating, especially when a business looks active, but ticks the wrong boxes. A recent case, Demetriou & Anor v Revenue and Customs (2024), shows how things can go very wrong, even when someone is working full-time in the business. LBP ran a wild fishery as a sole trader. She’d inherited it from her husband and managed it for nearly two decades, hands-on. Seven-hour days, weed cutting in the summer, always on-call for emergencies. She wasn’t passive or lazy, and she cared deeply. But when she died in 2020, HMRC refused the business property relief (BPR) claim on her estate. Why? Because although she worked tirelessly, the First-tier Tribunal concluded the business was “mainly one of holding investments”. And that single definition meant the estate missed out on significant tax relief. The appeal was dismissed. The court summed it up bluntly: the business was “more for love than money”. I’ve seen family business owners sleepwalk into similar situations. If your business straddles the line between trading and investing, don’t assume HMRC will be generous. If you're unsure where your business stands, especially with inheritance tax on the horizon, you need to get clarity. Ask the awkward questions before the tax bill asks them for you.

Family businesses are the backbone of the UK economy but passing them on can be complicated. Without early planning, inheritance tax (IHT), capital gains tax (CGT), and ownership disputes can turn a proud legacy into an expensive headache. Here’s how you can prepare to make a smooth transition > https://bit.ly/4gMhM65

The Pros and Cons of Gifting a Second Property into a Discretionary Trust. Navigating Inheritance Tax (IHT) for investment property owners requires balancing control with tax efficiency. One of the most powerful tools in the UK is the Lifetime Discretionary Trust, but it comes with significant trade-offs. Here is a breakdown of the key considerations (for UK tax purposes): ✅ The Pros (The IHT Mitigation Strategy) • Estate Exclusion: The primary goal. The property's value, and any future growth, is potentially removed from your personal estate for inheritance tax (IHT) purposes. • The 7-Year Rule: Once you survive the gift by seven years, the asset is entirely outside your estate, securing the IHT benefit. • Flexibility: A Discretionary Trust allows Trustees to decide who benefits, and when, offering powerful long-term family asset protection and succession planning. ❌ The Cons (The Rules & Immediate Impact) • Chargeable Lifetime Transfer (CLT): Gifts into a Discretionary Trust are CLTs. You can gift up to the available Nil-Rate Band (currently £325,000) without an immediate 20% IHT charge. Any excess above this threshold is immediately taxed. • The "No Benefit" Rule: To successfully remove the asset from your estate, you cannot benefit from the property's income or capital in the future (Gift With Reservation of Benefit rules). • Tax Complexity: Discretionary Trusts are subject to complex relevant property regime taxes, including potential 10-year anniversary charges and exit charges. They also pay higher rates of income tax on rental income (up to 45%). • Capital Gains Tax (CGT): Gifting the property into the Trust is a 'disposal' for CGT, meaning an immediate CGT liability on the gain (subject to Hold-Over Relief availability). Final Thought: This is a move for those genuinely ready to fully relinquish ownership and future benefit from the asset. It requires precision. Lodders Solicitors LLP Louise Igoe John Rouse Dawn Oliver Vicki Gulliver Sharon Crosby TEP Laura Banks, TEP Jennifer Russell Michael Neal-Brook Martha Dix #EstatePlanning #InheritanceTax #DiscretionaryTrust #WealthManagement #UKProperty

Tax changes for family businesses – is now the time to act? Hear from the experts at our North West Family Business Conference. 💬 Panellists at the event include John McCaffery, Tax Partner at Alexander & Co Chartered Accountants, who are family business specialists. John explains: “A critical issue in relation to the succession of family businesses is the upcoming changes to Inheritance Tax. “From April 2026, shareholders in a family-owned business will be liable for tax upon their death, where their shares are considered to be worth in excess of £1m.  “We are urging family business owners to review their estate plans now, even if these have been reviewed in the last year. This will help them to take advantage of current reliefs and avoid potential pitfalls before the changes apply.” Register your free place here 🔗 https://lnkd.in/eSEFcAsx Sponsored by Alexander & Co Chartered Accountants, Gorvins Solicitors and Rathbones.

A recent Saga investigation has revealed that HMRC’s inheritance tax (IHT) enquiries have risen by 41% in just one year, from 2,807 to 3,961 cases. It’s a striking figure, and one that shows how closely HMRC is now examining estates. Even well-intentioned planning can be questioned if the details aren’t fully documented or understood. According to Saga’s analysis, HMRC has become far more data-driven and proactive. The main triggers include: * Undervalued property, particularly where the valuation seems optimistic. * Gifts that aren’t truly given away, such as a house “gifted” but still lived in by the donor. * Overseas or omitted assets that don’t appear in the return. * Incomplete records of lifetime gifts or informal arrangements. * HMRC can look back as far as 20 years, which means even innocent omissions can cause long delays and stress for families. Saga suggests a few sensible measures: * Keep clear, detailed records of gifts, valuations, and correspondence. * Avoid gifts with reservation of benefit. Once given, the asset must genuinely be gone. * Take professional advice early (it’s far easier to plan well than to explain later). With property prices rising and tax thresholds frozen, more families than ever are being drawn into the IHT net. The Saga investigation is a timely reminder that good intentions aren’t enough: precision matters. If you’re reviewing your estate plans, or want to make sure your loved ones are protected from unnecessary scrutiny, it may be time for a conversation. 💬 As a private client solicitor, I help families plan with confidence, ensuring that what you intend to leave behind is passed on smoothly and securely. #WeAreEverys #IHT #EstatePlanning

Taxation of trusts can be a minefield. We've recently seen this highlighted by Angela Rayner's situation with her Hove property purchase, where legal advice didn't initially capture the full stamp duty liability. It's a complex area, even for those well-versed in the subject. Ian Dyall, head of estate planning at Evelyn Partners, emphasizes that the tax treatment of property transferred into a trust hinges on multiple factors. This includes aspects such as lifetime transfers, continued benefit use, and potential inheritance tax charges. Key takeaways: - Property remaining in an estate for inheritance tax if the transferor continues to benefit. - Potential 6% inheritance tax charge every 10 years on trust-held assets. - Strategies to avoid inheritance tax entry charge, such as keeping property value below the nil rate band. Despite the complexity and limited tax benefits, trusts can offer critical protection and control over assets. It's crucial to seek expert advice to navigate these intricacies effectively. For further insights or assistance with financial advisory positions, visit www.fergusondean.co.uk. #Taxation #Trusts #FinancialServices

Taxation of trusts can be a minefield. We've recently seen this highlighted by Angela Rayner's situation with her Hove property purchase, where legal advice didn't initially capture the full stamp duty liability. It's a complex area, even for those well-versed in the subject. Ian Dyall, head of estate planning at Evelyn Partners, emphasizes that the tax treatment of property transferred into a trust hinges on multiple factors. This includes aspects such as lifetime transfers, continued benefit use, and potential inheritance tax charges. Key takeaways: - Property remaining in an estate for inheritance tax if the transferor continues to benefit. - Potential 6% inheritance tax charge every 10 years on trust-held assets. - Strategies to avoid inheritance tax entry charge, such as keeping property value below the nil rate band. Despite the complexity and limited tax benefits, trusts can offer critical protection and control over assets. It's crucial to seek expert advice to navigate these intricacies effectively. For further insights or assistance with financial advisory positions, visit www.fergusondean.co.uk. #Taxation #Trusts #FinancialServices

Why tax and estate planning shouldn’t wait One of the biggest misconceptions we encounter is that estate and tax planning are things to worry about later. But the reality is, some of the most impactful decisions - especially when it comes to preserving family wealth and property - need to be made well in advance. Here’s why: Certain tax liabilities at death are unavoidable. For example, assets like RRSPs or RRIfs can create significant tax bills. Additionally, cottages, cabins, or investment properties can trigger large capital gains taxes when they’re passed on. And without planning, those tax bills can force difficult choices - including selling a family property simply to cover the cost. The good news is, with proactive planning, families can often address these challenges long before they arise. One common solution is using life insurance as a tool to cover anticipated tax liabilities. This can help ensure that assets with deep sentimental value - like a lake cottage that’s been in the family for generations - stay where they belong. Tax and estate planning isn’t about avoiding the inevitable. It’s about preparing for it - and making sure your legacy is preserved according to your wishes. Unfortunately, this story going around the news is a good example of the challenges of estate tax planning:

Why tax and estate planning shouldn’t wait One of the biggest misconceptions we encounter is that estate and tax planning are things to worry about later. But the reality is, some of the most impactful decisions - especially when it comes to preserving family wealth and property - need to be made well in advance. Here’s why: Certain tax liabilities at death are unavoidable. For example, assets like RRSPs or RRIfs can create significant tax bills. Additionally, cottages, cabins, or investment properties can trigger large capital gains taxes when they’re passed on. And without planning, those tax bills can force difficult choices - including selling a family property simply to cover the cost. The good news is, with proactive planning, families can often address these challenges long before they arise. One common solution is using life insurance as a tool to cover anticipated tax liabilities. This can help ensure that assets with deep sentimental value - like a lake cottage that’s been in the family for generations - stay where they belong. Tax and estate planning isn’t about avoiding the inevitable. It’s about preparing for it - and making sure your legacy is preserved according to your wishes. Unfortunately, this story going around the news is a good example of the challenges of estate tax planning: