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02 March 2006
Issue: 4047 / Categories: Forum & Feedback

My 80-year old client is about to sell his successful trading company for £2 million. Although some of the proceeds will go to his family (20%), and trusts (14%), he and his wife will receive 66%, all of which will potentially add to his, already considerable, inheritance tax liability. While they own the shares they get 100% relief, but as soon as these are converted to cash it becomes 100% chargeable. They do not desperately need the money and the obvious thing is to invest it in furnished holiday lets to retain the inheritance tax relief.

My 80-year old client is about to sell his successful trading company for £2 million. Although some of the proceeds will go to his family (20%) and trusts (14%) he and his wife will receive 66% all of which will potentially add to his already considerable inheritance tax liability. While they own the shares they get 100% relief but as soon as these are converted to cash it becomes 100% chargeable. They do not desperately need the money and the obvious thing is to invest it in furnished holiday lets to retain the inheritance tax relief. Do readers have any other suggestions on how to mitigate the tax liability?
Query T16 766 – Octogenarian.


Reply by Hodgy:

The sale of shares for £1 320 000 will create a capital gains tax bill of about £132 000 (assuming 75% business asset taper relief...

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