For Professional Clients Only
Orange Software
- Dennis is 63 and has signed a contract for sale of his business Orange Software for £3 million
- Dennis would like to take some time out and then potentially get involved in a start-up business or go travelling
- Without income from the business Dennis will still need access to income to supplement his pension planning
The Problem
- Orange was a trading business which qualified for Business Relief (BR)
- Unfortunately as a contract for sale has now been agreed, on his death there would be Inheritance Tax (IHT) to pay of £1.2 million
- Dennis would be willing to gift some of his sale proceeds but is concerned about living 7 years. He would be willing to pay for life assurance but due to his health, he has been told he may not be underwritten
The Solution
Invest part of the proceeds in BR qualifying shares
- As Orange Ltd was already BR qualifying, this is transferable between BR Qualifying assets
- No need to wait 2 years for BR IHT exemption
- Access to capital if needed to fund new start-up
- Access to income to supplement retirement
- Dennis has up to 3 years to reinvest the proceeds**
- The shares can then be placed in Trust without a Chargeable Lifetime Transfer tax applying (See case study on BR and Trusts)
Note – BR applies to qualifying shares held for 2 of the previous 5 years
Capital is at risk and the investor may not get back the amount invested
For more information about how our tax products can help with this scenario, please contact our tax team using the details below.
020 7071 3920
investor-relations@lighttowerpartners.co.uk
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