Pension Practitioner
The SSAS Experts
04
FEB
2016

What a Business Property Relief Clause can add to your tax plan

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You’re a small business owner who makes prudent and considered decisions regarding your finances, and so naturally, you have a will in place. But if your will doesn’t have in place a Business Property Relief Clause, you could be on a path to paying more than you should in taxes.

BPR is of particular relevance to business owners in the context of inheritance tax. The relief is potentially very valuable as it can reduce the value of an individual’s business interests by 100% for inheritance tax purposes,. This results in a saving of tax at 40% of the value of those interests. Typically, this can have a dramatic effect on the amount of tax, if any, ultimately payable.

It is necessary to assess the business as a whole in order to determine what Business Property Relief can be added to your will, in order to save expense. In many cases, ‘business property’ qualifies for a reduction in value for inheritance purposes, up to 100%, but as with all matters of finance, there are exceptions and strict governing regulations.

It is very important to have the most accomplished and trustworthy advisors on hand, as mixing up what is and is not ‘relevant business property’ could land you in hot water!

Some of the broader guidelines for instances that qualify for BPR include:

  1. the individual must have owned the relevant business property for at least 2 years before his or her death;
  2. the relevant business property must not be subject to a binding contract for sale at the time of its transfer; and
  3. the business must be actively trading and must not be holding substantial investment assets – this may be relevant where a business has built up a substantial cash reserve by retaining its profits over the years .

 

With this new service, the experts at Protection Practitioner can offer you a free will review service, and ensure that BPR clauses can reduce the amount of tax that is necessary to pay. The Articles take precedence over any conflicting clause in a Will and it is prudent to get the right tools in place both in the Articles and Will to ensure an easy transition for your family.

If you are concerned that your will doesn’t give your beneficiaries the security and financial freedom that they need, get in touch with Protection Practitioner for trusted advice and death planning services.

davidn@pensionpractitioner.com

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