Recent Budgets have trimmed or removed many tax advantages. Yet one major relief remains largely intact: #BusinessRelief. Why?
The answer lies in the problem it was designed to solve being just as relevant today as when the relief was introduced 50 years ago.
In the 1970s, death duties in the UK could reach 80%. When a business owner died, families often had little choice but to sell the company simply to pay the tax bill. Viable businesses were broken up and skills built over generations lost.
So, Denis Healey, Chancellor of the Exchequer, announced in 1976 that a new Business Property Relief would: “…substantially lighten the burden on transfer of businesses and … give the proprietors of small businesses greater confidence to invest and expand their activities.”
This means qualifying shares in trading companies can potentially pass between generations entirely free from Inheritance Tax, provided the relevant conditions are met.
Today Business Relief is still primarily aimed at protecting trading businesses, although it is increasingly discussed in the context of estate planning.
Understanding its origins helps explain why it continues to play such an important role in the UK’s Inheritance Tax system. https://lnkd.in/eZSkeCyp
For information only. This is not financial advice or a financial promotion. Tax rules and reliefs are subject to change and depend on individual circumstances.