Make business succession planning a priority

The current capital gains tax and inheritance tax rules provide an extremely benign environment for business succession, often allowing for the tax free passing on of businesses to subsequent generations during lifetime or on death.

With changes to both areas of tax looking increasingly likely as the government begins to recover its spending, now is the time to review your business succession plans and start thinking about what the future of your company could look like.

Family business succession can be a difficult subject, particularly when there are some family members working in the business and some not. It can often take some time to arrive at the best solution for both the family and the business and ensure everyone is treated fairly.

With that in mind and with tax changes potentially on the horizon, now really is the time to start thinking about how and when ownership of the business will transition.

It may be that the retiring generation needs to sell their shares to the next generation or the company to realise funds for their retirement. That will need some planning to ensure tax efficiency and time may be required to build up cash reserves. 

Leaving this too late could result in substantially less after-tax cash from the sale.

Alternatively, if the plan is to gift ownership of the business whilst retaining control, perhaps putting some shares into a family trust will provide the right solution.

• Whatever your family and business circumstances, investing a little time now in planning for the future is likely to pay dividends.

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