Can I claim Business Relief to reduce my Inheritance Tax liability?

Can I claim Business Relief to reduce my Inheritance Tax liability?

Many of our clients ask us about Inheritance Tax, how much they will have to pay and if there is any way for them to reduce their Inheritance Tax liability.

There are a number of reliefs and mechanisms that can be used upon death, and before through Wills and Trusts, to reduce an Inheritance Tax liability and one of these is Business Relief.

As the name suggests, to be eligible for Business Relief the assets must have some link to Business of the deceased but let’s have a look at this in more detail…

What is Business Relief?

Business Relief can reduce the value of a business or the business assets when valuing it for Inheritance Tax purposes and calculating the amount of Inheritance Tax that is payable.

Any business owned, or part-owned, by the deceased, and any shares in a business are included in an Estate when valuing it for Inheritance Tax purposes but the Executor (or Administrator) of the Estate may be able to claim Business Relief of 100% or 50% depending on the nature of the business assets that were held by the deceased.

*It is important to note that in most cases, the business assets will need to be held for at least two-years prior to death to qualify for Business Relief.

What is eligible for Business Relief?

As mentioned, some Estates will qualify for Business Relief at 100%, this would include where the deceased owned a business, or part of a business, and any shares that are owned in an unlisted company.

*NOTE: this does not include shares owned in listed companies (on the London Stock Exchange, for example).

Where 100% Business Relief is not available, the Estate may qualify for Business Relief at 50% and this would be on business assets such as:

  • shares which control more than 50% of the voting rights in a listed company;
  • land, buildings and machinery owned by the deceased and that were used in a business that the deceased owned or controlled;
  • land, buildings and machinery that were used in a business and held in Trust that it has the right to benefit from

Remember, that the Business Relief is only available on assets that were owned by the deceased for at least two-years prior to their death.

When Business Relief will not apply

An Estate will not qualify for Business Relief if the business owned by the deceased was a not-for-profit organisation, mainly dealt with securities, stocks or shares land and buildings or in making and holding investments, was being sold or is being wound up.

In addition, a business asset (land, building and machinery) will not qualify for Business Relief if it also qualifies for Agricultural Relief (see our blog in a couple of weeks on this!), was not used mainly for the business in the two-years prior to the deceased’s death or if it is not required for the future use of the business.

If you think that your Estate may qualify for Business Relief, or want to find out, it is important to seek specialist advice as this can make a huge difference when sorting out Inheritance Tax and the relevant forms that are required.

Alternatively, if you are an Executor (or Administrator) then you will know that you are under an obligation to maximise the Estate for the beneficiaries and therefore take advantage of all reliefs that are available to you. If you are unsure whether Business Relief applies (or indeed any other Reliefs) please seek the help of a specialist as this could be extremely beneficial to the beneficiaries and reduce the Inheritance Tax liability of an Estate enormously.

If you would like to have a free chat about your options, the Reliefs available, on your existing Will or in relation to making a new Will, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

Leah Waller

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Can I make a Lasting Power of Attorney if I have Additional Needs?

Can I make a Lasting Power of Attorney if I have Additional Needs?

As you may know (especially if you are an avid reader of our articles and blogs😉)  a Lasting Power of Attorney is put in place so that someone that you trust implicitly (known as an Attorney) can manage your finances & property and/or your health & welfare decisions on your behalf, when you are no longer able to do so.

A Lasting Power of Attorney must be put in place whilst the Donor (the person giving the Power) has capacity, and a Certificate Provider is required to certify this, in order for the Lasting Power of Attorney to be registered by the Office of the Public Guardian and it can be used.

A question we are often asked is…

Can you make a Lasting Power of Attorney if you have Additional Needs?

As we know, every individual is unique and must be considered on a case-by-case basis, and all needs vary. However, in order to make a Lasting Power of Attorney, the Donor needs to understand the effects of putting the Powers in place. 

We are contacted often by loved ones of the intended Donor, parents and family members of carers who want to ensure they are protected and that their money is used in their best interest. 

However…the decision MUST be made by the DONOR.

A Certificate Provider will meet with the intended Donor and go through, carefully and sensitively, the current circumstances and ask questions in relation to their individual circumstances and personal affairs, as well as current affairs in the news and media, to ascertain their general capacity and mental wellbeing. 

If the Certificate Provider is content that the intended Donor has capacity, and understands the importance of the Lasting Power of Attorney and the extent of the Power that they are giving to their Attorneys, then the Certificate Provider will sign their section of the Lasting Power of Attorney and, following all of the necessary signature, this can be sent to the Office of the Public Guardian for registration. 

When registering a Lasting Power of Attorney, it may be necessary to notify people that an application is being made, this is often necessary to protect the Donor. Notification can be given to up to five people, although this cannot be given to those that are being appointed as the Attorneys. This provides extra security for the Donor and allows the person, or people, being notified of the intended registration the opportunity to object to the Power being registered for any of the following reasons:-

  • if they believe that the Donor does not have mental capacity;
  • if the person being notified has a genuine belief that the Donor was under undue pressure to give the Power or is a victim of fraud;
  • if the person being notified has a genuine belief that the Attorney would act in a way that is beyond their powers under the Power or would not be in the best interests of the Donor;
  • if the Donor of the intended Attorney, or Attorneys, have already passed away;
  • if the Donor and intended Attorney were married or in a civil partnership and this has now ended;
  • if the intended Attorney does not have the mental capacity to be appointed as an Attorney;
  • if the Attorney is bankrupt;

Having both Lasting Powers of Attorney (one in relation to health & welfare and another in relation to property & financial affairs) in place means that, the Donor is able to appoint the people they know and trust, whilst they are still of sound mind to make such a decision, to make decisions for them when they are unable to do so for themselves. This can remove the unnecessary stress from both them and their loved ones and help to manage their day-to-day life much easier.

So, as you can see…

There is no straight YES or NO to the question of whether a Lasting Power of Attorney can be put in place for someone with Additional Needs but we are more than happy to have a chat with you or your loved ones about doing so. We are trained to deal with such circumstances and have many years experience in dealing with sensitive situations.

We are always happy to have a chat with you about putting a Lasting Power of Attorney in place, the Powers that are available and whether this is still a viable option for either yourself or a loved one.

If you would like to have a free chat about Lasting Power of Attorneys, please contact us on  info@TotalLegacyCare.co.uk or 01727 865 121

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