Certain business interests qualify for Business Property Relief (BPR) from inheritance tax on death. For instance, a partnership interest in a trading company owned for two years before death ought to qualify for 100 per cent relief such that the value of the interest is reduced to nil for inheritance tax purposes.
It is quite common in circumstances in which a person is married or in a civil partnership that they simply leave all of their estate to their surviving spouse or civil partner in the event of death. If the estate contains business interests this could be wasting the BPR however as assets passing to a spouse or civil partner are exempt from inheritance tax anyway.
It may be more tax efficient in the long run to leave the business interests into a trust as an alternative to all the estate passing outright to a surviving spouse or civil partner. The surviving spouse or civil partner can still benefit from the trust during their lifetime but without the underlying value of the trust fund then being included in their own estate in the event of their later death.
We can also advise on the most suitable business structures to ensure that a business is best placed to deal with such circumstances at a difficult time.