#Keep it in the family plus

#Keep it in the family plus

вЂ explained that SAV has begun to see companies with classes of shares that include a class with all voting rights but no rights to income or capital, plus one or more classes which have no voting rights but all rights to income and capital. Prior to that, a Shares and Assets Valuation (SAV) Fiscal Forum meeting in October 2018 addressed HMRCвЂ™s concerns about FICs: It was reported inВ TaxationВ magazine (18 March 2020) that HMRC hasВ set up a вЂsecret unitвЂ™ looking at how FICs are being used in IHT planning. to reflect non-controlling interests in the company), which may further reduce IHT exposure in the parentsвЂ™ estates. 25% each), the separate share values are likely to be subject to discounts (e.g. If the companyвЂ™s shares are spread between each parent and adult child (e.g.

WhatвЂ™s it worth?ДЄ gift of shares from parents to adult children is a potentially exempt transfer, so no immediate inheritance tax (IHT) liability arises a gift generally becomes exempt if the parents survive at least seven years.ДЇurthermore, any subsequent growth in value following an outright gift of the shares will normally fall outside the parentsвЂ™ estates (nb care is needed that the вЂgifts with reservationвЂ™ anti-avoidance provisions do not apply to treat the shares as remaining in the parentsвЂ™ estates). The FIC might be funded by cash initially, and subsequently acquire (say) commercial properties in the UK. For example, parents could apply their wealth for the benefit of (say) an adult son and daughter through anВ FIC. Furthermore, anВ FIC can be a tax-efficient вЂwrapperвЂ™ for individuals to manage their wealth.ДЄnВ FIC is simply a company its shareholders are family members. Mark McLaughlinВ looks at family investment companies and a possible challenge by HMRC on the effectiveness of such structures for inheritance tax purposes.ДЄ family investment company (FIC) is a possible means of passing family wealth down to adult children and remoter generations.