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Nursery nervousness

01 May 2012
Issue: 4351 / Categories: Forum & Feedback , Inheritance Tax
The owner of a children’s day nursery employs her daughter as a manager, but wishes to bring her in as a partner. They will share the profits equally and the mother intends that she will transfer a 5% share of the business property to the daughter

We act for a client a divorced lady in her late 60s who owns and operates a children’s day nursery.

She employs her adult daughter as the manager of the business and the wages are subject to income tax and Class 1 National Insurance contributions under PAYE.

For some time our client has been contemplating making her daughter a partner in the business. The business consists of the actual trade of the children’s day nursery itself and the encumbrance-free trading premises also owned solely by our client.

If our client were to make her daughter a partner in the business to the extent of say a full partner in the business with a 5% share in the bricks and mortar of the building would this still satisfy the condition under IHTA 1984 s 104 for 100%...

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