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Family Inheritance Tax Planning

Our clients run family-run trading businesses in both the care sector and in food and drink supply. Previously, the father had passed the business on to his son to run, along with his daughter-in-law. However, due to excellent financial and investment advice, the father had a taxable estate of over £3m and, at age 81, decided that inheritance tax (IHT) planning was now his top priority.

How we helped our client
The father had two children, the son mentioned above who ran the trading businesses and a daughter who lived overseas but had nothing to do with the trading businesses. At this stage, the father was not prepared to make outright gifts and expressed a preference to avoid trusts. In the event of his untimely death, it was estimated that over £1m IHT would be due.

After hosting three family meetings (including father, son, daughter and grandchildren), it was agreed that the father would invest £1m in the care business to fund its expansion, in return for a significant minority shareholding and directorship. The outcome of this was:

  • The father made an investment and was able to retain some control over that
  • The care business was able to fund a major expansion
  • The father’s income was mainly pension so the investment did not materially affect his lifestyle
  • Three years on, the father’s IHT liability is reduced by £400,000
  • The father’s will was redrafted to leave his shares on death to son, but with a mechanism to square up the value to his daughter

We have a delighted family, an enthused father and a huge tax saving.

For more information or to discuss further, please contact the Private Client Taxperts.

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