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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We are directors of our own small business. Due to illness

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We are directors of our own small business. Due to illness our son has been running the business for the last 5 years. We want to hand the business over to him, but we need to know the tax implications.
It is a Limited company with two shares, one mine one my husbands. We had believed that a company can be passed on to the next generation without any tax implication. We have been told however that, if we hand the company over now we would be liable for capital gains tax.
We are also told that if we do nothing now it leaves the shares to our son in our will, the value of the shares would be counted into our estate and liable for Inheritance Tax.
Hi. Let me take a look at this and I'll get back to you in a while.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Would still like the answer in black and white along with the phone call please.
I'll give you a written answer and call after that if that's OK.
Customer: replied 2 years ago.
Yes that would be great. Thanks
Provided you and the company meet the criteria set out in HS295 here you can gift your shares to your son and then make a claim for business asset holdover relief. That effectively transfers the gain to your son which will be taxable on him if and when he sells the business. As far as Inheritance Tax is concerned, take a look here and here. You should qualify for relief from IHT if your son keeps the shares until after your demise. You must have owned them for at least two years before givibng them away. That means at least seven years after the gift is made. I hope this helps but letme know if you have any further questions.
I'll let you take a look at the links I gave you and then I'll call.