If giving away business assets
If giving away shares
A claimant must be a sole trader or business partner, or have at least 5% of voting rights in a company.
The shares must not be listed on any recognised stock exchange.
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The shares must not be in the claimant’s personal company.
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A claimant must use the assets in their business or company.
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Table Three: GHR qualifications
Alongside individual utilisation, the two reliefs are often used together. BPR ensures there is no IHT charge on the transfer of shares into a trust (unless only the 50% relief applies) and ensures there is no IHT charge on the distribution of business assets from the trust to beneficiaries once they have been held in trust for at least two years. GHR ensures that the transferring of business assets to trust does not attract a CGT charge. What the Two Reliefs Enable The two reliefs are critical to the continued success of family businesses up and down the country – enabling effective succession planning, the adoption of a long-term economic outlook and the retention of profits within the business to be re-invested for long term success. All three elements are vital to delivering what’s needed most in a successful and growing economy – stability. Succession Planning The central pillar of all family businesses is the involvement of dedicated and passionate family members who care about the history and longevity of their company. The model of family business is unique; one in which those owning the business are driven by the goal of handing on their company to the next generation, ensuring success over many years. The presence of BPR and GHR enables family businesses to effectively plan for succession, bringing in family members when they are ready and equipped to take on the day-to-day management of core business activities. Significant time and money is invested to ensure future generations are positioned to lead family businesses and have the right skills and knowledge to flourish in their roles. Succession is a process not taken lightly by the UK’s family businesses, with many putting in place processes to ensure family members are ready to take the reins when the time is right. One of the main pluses of BPR is that it provides an opportunity for family members to maintain ownership (overall control), but hand down management responsibilities. If a succession is not successful, BPR provides an opportunity for previous management to step back in and take control. If BPR did not exist, the transfer of shares would need to be brought forward before it was absolutely right to do so. Non-working family members would receive shares at too early a stage in their lives. We have a belief that family members should earn their way to a shareholder
6th generation family business outlining how BPR enables effective succession planning
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