The purpose of this chapter is to highlight those areas of taxation that are likely to impact on a business, and to look at the opportunities there are to reduce the amounts that are payable on the income generated by a business.
No one wants to pay tax, but everyone needs to pay their share for society to function. It is only right that those with the most should pay the most.
Luckily, there are numerous opportunities for individuals to mitigate their tax bills, but the problems highlighted recently in Panama show how businesses have abused these opportunities.
Some businesses have reduced their taxes to minuscule amounts, with little regard to the effect it has on their company image and on the ability of society to function.
This abuse has led to the Tax Authorities toughening their stance on tax avoidance.
The taxes payable on business profits are
■ Income tax
■ Corporation tax
■ Value‑added tax (VAT)
■ Capital Gains tax (CGT)
And, in theory, you can decide, dependent upon the structure you utilize to run your business, which of these taxes you pay. Obviously, advice from a specialist tax accountant or lawyer will be necessary to enter into a complex tax savings scheme, but often the tax savings made will only just cover the professional fees involved.
Income tax was introduced in the UK initially to provide funding to fight the Napoleonic Wars, and although the rates and types of taxes have changed many times since, the collection of tax is still a popular pastime for the government of the day.
Income tax is raised on individuals; it is a personal tax and is levied as a percentage of the total income after allowances. It is the tax that most business owners pay on their profits, unless they have incorporated. The rate at which tax is levied and the allowances available (currently in the UK – July 2017) are as follows:
A more detailed explanation of the table below, listing tax bands, can be found in the Tax on Dividends section following.
|
Basic rate |
20% |
|
Higher rate |
40% |
|
Additional rate |
45% |
|
Starting rate for savings income |
0% |
|
Dividend ordinary rate |
7.5% |
|
Dividend upper rate |
32.5% |
|
Dividend additional rate |
38.1% |
Income tax and allowances 2017/2018
|
Starting rate limit (savings income) |
5,000 |
|
Basic rate band |
Up to 33,500 |
|
Higher rate band |
33,500–150,000 |
|
Additional rate band |
Over 150,000 |
Married couples allowance for those born before 6 April 1935
|
Personal allowance |
11,500 |
|
Income limit for personal allowance |
100,000 |
|
Income limit for married couples allowance |
28,000 |
|
Marriage allowance |
1,150 |
National insurance contributions thresholds
|
Maximum amount |
8455 |
|
Minimum amount |
3260 |
|
Blind person’s allowance |
2320 |
|
Dividend allowance |
5000 |
|
Personal savings allowance for basic rate taxpayers |
1000 |
|
Personal savings allowance for higher rate taxpayers |
500 |
Employee’s Class 1 contribution rates
|
Weekly lower earnings limit (LEL) |
113 |
|
Weekly primary threshold |
157 |
|
Weekly secondary threshold |
157 |
|
Upper earnings limit (UEL) |
866 |
|
Upper profits limit (UPL) |
45,000 per year |
|
Upper secondary threshold for U21 |
866 |
|
Small profits threshold (SPT) |
6,025 per year |
|
Lower profits limit (LPL) |
8,164 per year |
|
Employment allowance |
3,000 per year (per employer) |
Employer’s secondary contribution rates
|
Earnings Band |
NIC Rate (%) |
|
Below LEL |
0 |
|
LEL to PT |
0 |
|
PT to UEL |
12 |
|
Above UEL |
2 |
Dividends are taxed as the top slice of income. Where the total income is above £150,000, the tax rate on dividends will be at the higher rate of 38.1%.
|
Above secondary threshold (ST) |
13.8 |
The personal allowance is restricted for individuals with a net income of over £100,000. For every £2 of net income above £100,000, the allowance is restricted by £1 until it is reduced to nil.
For example, individuals earning over £111,500 will receive half the personal allowance (£5,750).
Individuals earning over £123,000 will receive no personal allowance.
For this purpose, net income means income subject to income tax.
Business proprietors who increase their level of income from £100,000 to £123,000 will effectively suffer a tax charge of 60% on the additional £23,000 of profits.
This is because the £23,000 will attract tax at the rate of 40% as usual, but the loss of personal allowances means that £11,500 of income that had previously been covered by those personal allowances will now also be taxed at the 40% rate. The total tax is £13,800, which is 60% of £23,000, so this band of earnings needs to be avoided.
Given the way that tax is collected, i.e., the collection of the balance due and the payment on account for the next year, the cash cost of these earnings is even higher than 60%, as can be seen next.
1.Tax due on £23,000 extra profits for the year to 31 March 2018 is £13,800 and is payable on 31 January 2019.
2.On that day, the first on-account payment for 2018/2019 will also be due (of half the above balance) of £6,900.
3.On 31 July 2019, a second on-account payment is payable of £6,900. A total cash tax bill of £27,600 will be paid on earnings of £23,000 (120% tax!).
4.The tax on-account payments for next year of £13,800 in total will be offset against the income earned in the next year 2018/2019 (i.e., tax is paid in advance as it is assumed that the same amount will be earned in the next year).
Income tax in the UK is calculated on the income earned in the year ending 5 April each year (the reason why the 5 April date applies is due to the UK changing from the Julian calendar to the Gregorian calendar in 1752! The tax year was adjusted to accommodate the change and has remained the same ever since).
Business owners in the UK need to submit a tax return and calculate the tax due on their income (self-assessment), return their tax details and pay their tax for the year to 5 April each year by 31 January in the following year.
Most businesses will engage the services of an accountant to deal with this task.
If you plan to run your business using a company, it is usual to extract some of the profits by way of dividend payments. In the UK, you do not pay tax on the first £5000 of dividends that you receive in the tax year. This £5,000 is in addition to the personal allowance of £11,500, so a dividend taken from a company of £16,500 would effectively be tax-free, as long as there was no other taxable income received in the year.
This £5000 allowance is due to decrease to £2000 in the future.
Further dividends are taxed as follows: dividends from £16,501 to £33,500 are taxed at 7.5%, from £33,501 to £150,000 at 32.5% and at 38.1% after that.
The company has to pay corporation tax of 20% on the profits of the business, in addition to the above.
Optimum Tax Planning for Directors on Low Earnings
Businesses with lower levels of profits should look at the most efficient way of extracting the profits from their company.
A common strategy used by most business company owners is to take a low salary from the company with the balance of the income they need being made up of dividends. This can work as follows:
1.A small salary is taken, no higher than the personal allowance, so that no income tax is due on the amount.
2.However, the salary needs to be high enough to gain credits for that year for national insurance purposes, i.e., the lower profits limit (above) of £8164, as this will ensure that there is sufficient income in that year to qualify for state pension and benefit purposes. A small amount of national insurance may be due on the salary (see previous table).
3.The salary is deductible for corporation tax purposes (at 20%), so the company can claim tax relief on the payment while the business owner receives the amount with only minor deductions taken from it.
4.Any extra money that the business owner needs can be taken as dividends, which are not subject to national insurance. These dividends are not an expense of the company, so tax relief cannot be claimed on them.
5.The National Insurance Employment Allowance allows for the non-payment of up to £3000 of employers’ national insurance. However, the Employment Allowance is not available where the business owner is the only employee on the payroll, so this allowance is not available to ‘one-man band’ companies.
6.When the above strategy is coupled with the £5000 tax-free dividends (for both spouses), a significant amount can be taken from the company with only relatively minor deductions.
As always, I would advise that a professional be consulted before embarking on any tax saving exercise.
Any payment made by a company on behalf of its employees or directors is treated as a ‘benefit-in-kind’ and subject to income tax.
Corporation tax is levied on the profits of incorporated businesses, i.e., limited companies.
The rate of corporation tax you pay depends on how much profit your company makes.
In 2015, the UK government announced legislation setting the corporation tax main rate (for all profits except ring-fence profits) at 19% for the years starting 1 April 2017, 2018 and 2019 and at 18% for the year starting 1 April 2020.
In 2016, the government announced a further reduction to the corporation tax main rate (for all profits except ring-fence profits) for the year starting 1 April 2020, setting the rate at 17%.
(Ring-fence profits: There are different corporation tax rates for companies that make profits from oil extraction and oil rights in the UK or the UK continental shelf. These are known as ‘ring-fence’ companies. They pay corporation tax at the main rate as other companies and also at the rate of 30% on profits in excess of £300,000.)
Corporation tax is self-assessed, similarly to income tax, in that a corporation tax return needs to be completed annually, and the tax calculated by the taxpayer.
The corporation tax return needs to be submitted to the Tax Authorities within 12 months of the year-end date, and the tax calculated thereon needs to be paid within 9 months and 1 day from that date.
There are more complex rules when the business is operated through more than one company, especially when these operate in different countries.
Example of Tax Planning Exercise
While the preceding tables can look confusing, they hold the key to substantial savings. To aid in understanding the following exercise, I have used JT’s Restaurant as an example.
The profits of that business are forecast to be accessed by the team as follows:
■ Tony the chef to take a fixed salary of £60,000.
■ Me to take drawings of £1700/month in the first year, £2000/month in the second year and £2500/month in the third year.
As VAT payments are not allowable deductions for tax purposes, if these are added back then the cash excess each year that will be treated as profit is
These amounts are to be treated as mine, which are in addition to the amounts that I am drawing on a monthly basis.
|
Year 1 |
£33,159 |
|
Year 2 |
£52,999 |
|
Year 3 |
£69,689 |
If we assume that Tony and I are both married, and the income from the restaurant is the only income that Tony and I (and our wives) receive, our tax bills can be calculated as follows:
1.With myself as a sole trader, Tony on his salary of £60,000 and the wives not involved:
2.The tax bill can be varied if the business is incorporated, and myself, Tony and our wives all take £16,500 in dividends. I will also take a salary of £20,559 and Tony a salary of £27,000 (these amounts have been calculated to ensure that we [and our wives] both receive the same share of income as in the previous first option). The tax bill now becomes:
|
Paul’s tax bill |
£10,423.60 |
|
Tony’s tax bill |
£13,000.00 |
|
Total |
£23,423.60 |
A tax saving of £1149.30 for the year, which maybe on the face of it doesn’t look significant, but, as can be seen next, is an indicator of bigger savings to come.
|
Paul’s tax bill |
£2,674.30 |
|
Tony’s tax bill |
£6,400.00 |
|
Company tax |
£13,200.00 |
|
Total |
£22,274.30 |
If the same profit withdrawal methods are considered in year two, the taxes are
1.If the business is operated by me as a sole trader and with Tony the chef on a salary:
2.Utilizing a company and paying dividends to spouses:
|
Paul’s tax bill |
£19,799.60 |
|
Tony’s tax bill |
£13,000.00 |
|
Total |
£32,799.60 |
A saving of £2625.00.
|
Paul’s tax bill |
£10,574.60 |
|
Tony’s tax bill |
£6,400.00 |
|
Company tax bill |
£13,200.00 |
|
Total |
£30,174.60 |
If we consider the options again in year three, the savings could be
1.Again, if the business were to be run by me as a sole trader with Tony on a £60,000 salary:
2.Utilizing a company and paying dividends to spouses:
|
Paul’s tax bill |
£28,875.60 |
|
Tony’s tax bill |
£13,000.00 |
|
Total |
£41,875.60 |
A further saving of £2625.00.
|
Paul’s tax bill |
£19,650.60 |
|
Tony’s tax bill |
£6,400.00 |
|
Company tax bill |
£13,200.00 |
|
Total |
£39,250.60 |
Overall, the savings for the 3 years could be £6399.30, and this amount would probably increase the larger the profits get.
It’s enough for an extravagant holiday (or business conference?) somewhere to celebrate the business’s success.
But note that the savings are purely in respect of taxes, and national insurance hasn’t been taken into account. The national insurance consequences would need to be examined before the format of the business was altered to gain the tax benefits.
In addition, a number of non-monetary issues need to be addressed when incorporating a business, and the tax savings may be lost if the limited company format isn’t considered the best way forward for those involved.
In Chapter 3, I mentioned that there were more hoops to jump through when operating a business through a company, and it is probable that some of the above savings would be needed to pay the higher legal and accountancy fees.
Alternatively, by incorporating a business, the tax savings made could be sufficient to pay the business’s annual accountancy fee.
For those of you with an interest in figures, I suggest that you run through the preceding example again and try to calculate the savings figures yourself. The workings for the examples are included in Chapter 12 for you to check your accuracy.
VAT is a tax that is calculated as a percentage of the turnover of a business and is currently (July 2017) charged at a rate of 20%.
VAT was originally a French idea, started in the 1950s. Britain introduced it as part of its condition of joining the European Economic Community (EEC). All countries joining the EEC had to replace their indirect taxes with VAT.
Most countries in the world utilize a VAT method of raising tax; the USA has a sales tax instead. VAT is an important and efficient system, which is why it is used by so many countries.
VAT is levied on a business’s turnover after allowing a deduction for the VAT on the expense incurred in creating that turnover, with the business paying over the net amount of VAT.
The business has to calculate the VAT due on a quarterly basis and submit returns summarizing those calculations.
The taxable limits are as follows:
1.You must register for VAT when your VAT taxable turnover is more than £85,000 (the threshold) in a 12-month period.
2.You receive goods in the UK from the EU worth more than £85,000.
3.You expect to go over the threshold in a single 30-day period.
You can get a registration exemption if your turnover exceeds the threshold temporarily, and you can also voluntarily register if your turnover is below the threshold.
You may also have to register if you take over a business that is already registered.
It is relatively straightforward to register, it can be done online in minutes. There are penalties for late registration, so it is vital that you keep your eye on your turnover for VAT purposes.
The standard rate of VAT is currently (July 2017) 20%; a reduced rate of 5% applies to home energy and some other items; and a zero rate applies to food, health and children’s clothes.
In order to account for VAT, businesses need to add 20% to the price of their goods and services. From this, they are able to deduct the VAT that they have been charged and return the net figure to the VAT office.
The following is a simplified VAT calculation:
A business buys bicycles for £100 plus VAT and sells them at £200 plus VAT.
The quarterly VAT return has to be submitted online, even if the figures mean that there is a repayment of VAT due.
|
VAT on outputs/sales is 20% of £200 |
£40 |
|
VAT on inputs/purchases is 20% of £100 |
£20 |
|
Amount due to HM Revenue & Customs (HMRC) |
£20 |
CGT is a tax on the profit made when you dispose of an asset that has increased in value. Along with Inheritance Tax, it is a tax that is relatively easy to avoid as some disposals are tax-free.
■ A transfer between spouses or civil partners is tax-free (made on a no gain/no loss basis).
■ A gift made between connected persons is treated as being made at market value.
■ When a disposal attracts another form of tax, such as Inheritance Tax or income tax, credit is generally given so there is no double charge.
■ An income tax trading loss may be offset against capital gains.
■ Capital gains may be deferred by reinvestment in some cases.
■ Non-UK residents are not taxed on gains made on assets situated in the UK (other than residential property), providing that they remain non-resident for a qualifying time period.
■ You can reduce your liability to the tax by deducting previous losses you have made on the disposal of some assets.
■ Disposal of an asset can be
– Selling it
– Giving it away as a gift
– Transferring it to someone else
– Swapping it for something else
– Getting compensation for it, for example, an insurance payout
It is payable on most assets, which include most personal possessions worth £6000 or more (except motor cars). It is also payable on any property you own (that isn’t your main home), although it can be payable on your own home if you’ve let it out, used it for business purposes or it is very large (see Annual Tax on Enveloped Dwellings below).
It is payable on the disposal of shares and business assets, and it is this aspect of the tax that will mostly affect the business owner.
There are a number of significant reliefs that business owners can claim in order to reduce their liability to CGT.
Capital Gains Tax Rates and Bands
In the UK, taxpayers who are liable for CGT get an annual tax-free allowance (known as the Annual Exempt Amount), which is currently £11,300 a year.
Taxpayers only pay CGT if their overall gains in the tax year (after deducting any losses and applying any reliefs) are above this amount.
The rate of CGT payable on a disposal varies, being dependent upon the taxable income of the taxpayer.
Basic rate taxpayers pay 10% of the profits on disposal of all assets (other than residential property and carried interest).
Higher rate taxpayers pay 20% of the profits on disposal of all assets (other than residential property and carried interest).
Carried interest is a financial interest in the long-term gain of a property development.
Gains on residential property and carried interest are taxed at 18% for basic rate taxpayers and 28% for higher rate taxpayers.
But taxpayers don’t pay any CGT when they sell (or dispose of) their own home under Private Residence Relief (which is subject to a number of provisions).
CGT of 28% is paid on the profits on the disposal of property subject to the Annual Tax on Enveloped Dwellings (ATED; see details below). The Annual Exempt Amount does not apply to these disposals.
Companies generally pay corporation tax at the rate of 20% on the capital gains they make (including non-resident CGT on the disposal of a UK residential property).
There are separate provisions for dealing with the gains made by trustees dealing with deceased estates.
Capital Gains Tax for People Non-Domiciled in the UK
A non-domiciled individual is a person, currently in the UK, who was born in a country other than the UK, and intends to return to their country of birth.
Non-domiciled individuals do not get the Annual Exempt Amount for CGT purposes if they have claimed the ‘remittance basis’ of taxation on their income and gains from overseas.
They can claim the ‘remittance basis’ if they decide that it is beneficial to have their income and gains from abroad, which they bring into the UK, taxed in the UK. If they claim this option, all other foreign income that is not remitted to the UK is not taxed in the UK.
From April 2015, non-domiciled individuals have to pay CGT on gains realized on UK residential property. The gain taxable is restricted to any growth from the April 2015 value. Alternatively, the seller can elect to pay on a time apportionment basis if doing so would be beneficial.
The matter of foreign income and gains is very complicated, and expert advice should be sought at all times.
Annual Tax on Enveloped Dwellings (ATED)
ATED is an annual tax that is payable mainly by companies that own UK residential property valued at more than £500,000.
Property owners need to submit a return and pay the tax due using the ATED online service.
A return is required if the property is a dwelling in the UK, which is owned completely or partly by a
1.Company
2.Partnership where one of the partners is a company
The amount payable is worked out using a banding system based on the value of the property.
Obviously, there is a lot of activity regarding valuations of property on or near these thresholds, i.e., a property valued at £499,950 will pay £31,400 less than a property worth £50 more! and the owners would be keen to keep the value to the lower amount, but to bear in mind the effect this may have on the eventual sales price of the property.
Table 6.1 Chargeable Amounts for 1 April 2017 to 31 March 2018
|
Property Value |
Annual Charge |
|
More than £500,000 but not more than £1 million |
£3,500 |
|
More than £1 million but not more than £2 million |
£7,050 |
|
More than £2 million but not more than £5 million |
£23,550 |
|
More than £5 million but not more than £10 million |
£54,950 |
|
More than £10 million but not more than £20 million |
£110,100 |
|
More than £20 million |
£220,350 |
The Tax Authorities can query the value of a property on the return, and charge the tax plus interest and penalties if they consider that there had been a deliberate under declaration of the value.
Stamp Duty Land Tax is paid on property purchases in the UK. The percentage amount payable depends upon the property being purchased, and whether an individual or limited company is buying the property.
The rates can vary from 0% for lower value residential properties, to 15% (payable by companies).
By way of explanation, the UK housing market, particularly London, overheated in the late 2000s, and many of the previously described provisions were brought in to stop non-UK citizens using limited companies to speculate in the market.
Entrepreneurs’ Relief reduces the amount of CGT on a disposal of business assets to an effective rate of 10% for all taxpayers, subject to a lifetime limit of £10 million. It is available to individuals and some trustees of settlements, but it is not available to companies or some trusts.
In order to gain from this relief, you need to make a claim to the Tax Authorities by the first anniversary of the 31 January following the end of the tax year in which the gain was made. There is a specific form provided for completion and submission. (The HS275 Self-Assessment help sheet is available to download from the HMRC site.)
Husbands, wives and civil partners are separate individuals, and each may make a claim. They are each entitled to Entrepreneurs’ Relief up to the maximum amount available for an individual.
Gains that qualify for Entrepreneurs’ Relief are taxed at 10%.
The relief applies to assets owned by you personally and used in a business carried on by either (i) a partnership of which you are a member or (ii) your personal trading company or companies.
The above references to ‘business’ include any trade or profession, but do not include the letting of property (unless this is furnished holiday lettings).
You must have owned the business directly or it must have been owned by a partnership in which you were a member.
Entrepreneurs’ Relief is not available on the disposal of assets of a continuing business unless they’re included in a disposal of a distinct part of the business, for example, the sale of a half share of a business.
If the business is owned by a company in which you dispose of the shares or securities, then prior to the disposal for a period of 1 year the company must be
■ Your personal company
■ Either a ‘trading company’ or the holding company of a ‘trading group’
In addition, you must be either an officer or employee of that company (or an officer or employee of one or more members of the trading group)
A company is your personal company if you hold at least 5% of the ordinary share capital and that holding gives you at least 5% of the voting rights in the company.
Once the £10 million lifetime limit has been claimed, business owners can no longer claim the relief on any future businesses they set up.
But the spouse of an Entrepreneurs’ Relief claimant can also claim Entrepreneurs’ Relief provided they also own at least 5% of the business, and work there in some capacity also.
So, once a business owner has used up their own lifetime Entrepreneurs’ Relief limit, they can in theory claim up to a further £10 million by simply transferring their stake in a business to their spouse at least 1 year before they plan to sell the business.
This is an example of how detailed planning for a future business disposal can save significant amounts of money.
Given that this relief is not available to companies, it will have an effect on how the sale of a business is structured if a company is involved.
As always, expert advice should be sought upon a business disposal.
Tax relief can be claimed on fixtures, fittings and equipment used in the business, by way of a writing down allowance, and the writing down allowances currently available vary, depending upon the asset type.
The logic behind the allowance is to give tax relief to the loss of value of an asset as it ages.
The rules regarding capital allowances are complex, and advice should be sought before any significant purchases are considered.
In the UK, national insurance is a system of taxes paid by employees and employers, used primarily to fund state benefits.
It was originally a contributory scheme to fund illness and unemployment, but later expanded to fund the state pension and other benefits that have been introduced over time.
Over time, however, the link between the payment of the tax and the purpose it was to be used for has been lost, and the amounts are now lost in general government revenues.
There has been no ring-fencing of the pension element, as you would expect from a contributory pension scheme, and recent reviews of the adequacy of the system to provide state benefits has led to the increase of the state pension age.
National insurance contributions are paid by both the employee and the employer, based on a percentage of the salary paid. The self-employed contribute partly by a fixed weekly or monthly payment, and partly on a percentage of net profits, above a certain threshold (see National Insurance tables earlier in the chapter).
Individuals may also make voluntary contributions, in order to fill a gap in their contributions record and thus protect their entitlement to benefits.
Employee and employer contributions are collected through the PAYE system while the self-employed contributions are collected through the self-assessment system.
National insurance is significant in that it provides 21.5% of the government’s revenue.
Inheritance Tax is a tax on the estate, in excess of £325,000, of someone who has died, unless:
1.Everything has been left to the spouse or civil partner of the deceased, a charity or a community amateur sports club.
2.The deceased gives away his/her home to his/her children or grandchildren, when the threshold will increase to £425,000.
3.For taxpayers who are married or in a civil partnership, with an estate worth less than the threshold, any unused threshold can be added to their partner’s. This means that the surviving partner’s threshold can be as much as £850,000.
Inheritance Tax is charged at 40% of the estate which is in excess of the threshold, for example, an estate worth £500,000 would only pay 40% on (£500,000 less £325,000) £175,000, a total of £70,000.
Inheritance Tax can be reduced to 36% on some assets if more than 10% of the estate is gifted to charity.
In order to stop taxpayers circumventing the rules, any gifts that they make prior to their death, which will reduce the value of their estate, will be added back to be included in the estate value. Interestingly, this excludes gifts to political parties.
There are a number of provisions regarding gifts, and the timing thereof, which make the calculation of estate values a difficult job, only for the professionals.
A number of reliefs are available to reduce the impact of Inheritance Tax, but the one of interest to the entrepreneur is Business Relief, which allows some assets to be passed on free of Inheritance Tax or with a reduced bill.
You can get 100% Business Relief on
1.A business or interest in a business.
2.Shares in an unlisted company.
You can get 50% Business Relief on
1.Shares controlling more than 50% of the voting rights in a listed company.
2.Land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled.
3.Land, buildings or machinery used in the business and held in a trust that it has a right to benefit from.
The relief is only available if the deceased owned the business or asset for at least 2 years before they died.
Business Relief is not available for assets that
1.Are used in a business that is not operating for profit.
2.Also qualify for Agricultural Relief.
3.Weren’t used mainly for the business in the 2 years before they were either passed on as a gift or as part of a will.
4.Aren’t needed for future use in the business.
Relevant property must be held for at least 2 years in order to qualify for relief.
|
Type |
Rate of Relief |
|
A business or an interest in a business |
100% |
|
Unquoted securities that on their own or combined with other unquoted shares or securities give control of an unquoted company |
100% |
|
Unquoted shares, including shares listed on the Alternative Investment Market (AIM) |
100% |
|
Quoted shares that give control of the company |
50% |
|
Land or buildings, machinery or plant used wholly or mainly for the purposes of the business carried on by a company or partnership |
50% |
|
Land or buildings, machinery or plant available under a life interest and used in a business carried on by the beneficiary |
50% |
■ You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will.
■ Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively.
Inheritance Tax regulations are complex, and advice should be sought if it is thought that this is a tax you could be subject to.