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This fourth article in a five-part series considers freezer and growth shares, compares family investment companies (FICs) with discretionary trusts and addresses the often-misunderstood position on inheritance tax (IHT) business property relief (BPR). 

Nick Wright examines how a family investment company can deliver long-term inheritance tax and succession planning advantages. 

Company shares are often issued to employees for less than market value as a reward or incentive (for simplicity, it is assumed here that the company is a ‘singleton’ company (i.e., no holding company or subsidiaries) with ‘plain vanilla’ (e.g. unrestricted and non-convertible) shares, and the employee is UK resident. 

Mark McLaughlin highlights a useful tax relief for companies that is perhaps less well-known than it should be. 

A dividend is a distribution of a company’s retained profits to its shareholders. Paying dividends can be a tax-efficient way to extract profits from a company, as dividends are taxed at dividend tax rates, which are lower than the standard income tax rates, and there is no National Insurance contributions (NICs) liability to worry about. However, the profits from which dividends are paid have already suffered corporation tax.

Sarah Bradford explains how to keep dividends lawful and highlights pitfalls to avoid.

During an oppressively hot July afternoon, Violet Buckle was ‘hiding’ in her air-conditioned office and thinking about the future of ‘her’ large fashion and fabrics business. The company was currently worth some £8m. Violet, known to her friends as Vi, was 64 years old and she owned 100% of Buckles Fashions and Fabrics Ltd (BFAF). She had a life-partner of some 15 years – Fred – but he did not work for the company.  

Peter Rayney shares the start of a recent succession planning project.

A company is a separate legal entity, distinct from the shareholders that own it. Consequently, if the directors and shareholders want to use the profits made by the company for their personal use, they will need to extract those profits first. There are various ways in which this can be done; some are more tax-efficient than others.  

Sarah Bradford considers options for extracting profits from a company in a tax-efficient manner in the 2024/25 tax year.

HMRC recently undertook a ‘One to Many’ letter campaign, wherein HMRC’s skilled data analysts undertake to mine nuggets from a huge range of sources to test for omissions or errors in tax returns. 

Lee Sharpe reports on HMRC getting all ‘Nancy Drew’ with its sleuthing over company reporting and shareholders’ dividend income returns. 

Some company shareholders may either be unaware or have forgotten about a relatively unknown capital gains tax (CGT) relief that offers a reduced CGT rate of only 10% on qualifying gains of up to £10m during their lifetime, if certain conditions are satisfied.  

Mark McLaughlin highlights a relatively unknown and infrequently used but generous capital gains tax relief.

Owner-managers can spend a significant amount of time and energy building a successful and profitable trading company.

Joe Brough looks at tax issues for business taxpayers and their tax advisers when a company is coming to an end.