Succession planning can be tricky for family businesses and decisions can sometimes be put off as a result.
Given the pension changes in the recent Budget, abolishing the lifetime allowance, and a potential future Labour government on the horizon, changes to inheritance tax are becoming more likely and are only going to go one way.
Now is the time to consider business succession.
The tax rules are currently such that retaining your shares and passing them on death is very tax efficient.
However, that may change in future, and it can also be a block to genuine business succession.
It pays to consider what’s best for your family and business early and build the best plan for you.
Ignoring it because it’s too difficult is rarely the best option.
If making outright gifts of shares to family is a step too far just now, maybe consider a family trust to allow you to give away the value, but where you can still retain control of the shares in the role of trustee.
This can be a good way of allowing non-working family members to share in some of the benefit from the family company without them having a direct shareholding and allowing the tax-efficient spreading of income across the family.
Don’t bury your head in the sand – build your succession plan and use the tax reliefs now before it’s too late.
Enjoyed this? Read more from Wendy Anderson, PM+M