Gifting business assets to reduce tax

Like everyone else, business owners are allowed to make gifts to reduce the size of their estate for IHT purposes. These gifts are completely exempt – which means they pass out of the estate for IHT purposes from the moment they are handed over – or are potentially exempt. Potentially exempt transfers (PETs) completely disappear from your estate for IHT purposes after seven years. Refer to Chapters 15 and 16 for more on exempt and potentially exempt gifts and how to use them in your great IHT-avoidance scheme.

Over many years, gifting can substantially cut down on the cash that passes to HMRC. Business owners often use gifting to give a family member a substantial share in the business tax-efficiently.

Gifting business assets to reduce tax

Exempt gifts include lots of small gifts and one big gift of up to £3,000 in any one tax year. In addition, you can make exempt gifts on the occasion of the marriage of a child, grandchild, close relative, and even friend.

Gifting business assets to reduce tax

Focus on assets that are not due business property relief if you decide to dish out some of your business assets in the hope of making use of the exempt gift rules.

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