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Invest in the business – IHT-efficiently!

Shared from Tax Insider: Invest in the business – IHT-efficiently!
By Mark McLaughlin, November 2023

Mark McLaughlin points out that some ways of investing in the business are better for inheritance tax purposes than others. 

Business property relief (BPR) is valuable for inheritance tax (IHT) purposes. It broadly reduces transfers of certain types of business property by a specified percentage. For example, shares in an unquoted trading company can qualify for BPR at 100% if certain conditions are satisfied. One of the BPR conditions is a minimum period of ownership requirement. BPR is generally unavailable unless the relevant business property has been owned by the transferor for a minimum of two years.  

By contrast, if a shareholder has made a straightforward cash loan to the company, there is generally no prospect of BPR on those funds upon the individual’s death.  

Tax alchemy 

The two-year ownership requirement for BPR purposes is only a

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