Ownacarehome member exclusive content
Extraction of Profit in a Tax Efficient Manner from a Company
If you are a care home business owner, with children in private education, a significant tax bill adds to all the other pressures that life brings.
However, there may be a solution which at the time of writing continues to be a viable tax planning option! It could considerably reduce your family tax burden.
As the cost of living rises help is at hand to support the next family generations
An alternative is for a grandparent to hold shares in your care home trading company and to settle the shares into a trust for the benefit of the grandchildren.
The gift into the trust will be a disposal for capital gains tax purposes, but an appropriate tax election can be made to hold over the tax gain.
The grandchildren would benefit by utilising their personal allowances to receive dividends paid out on the shares thus mitigating the tax liability.
Control of the shares remains with the grandparents, as trustees.
There are different types of trust available, and this will impact the complexity of the process from a tax and flexibility perspective, namely a bare trust or discretionary trust and it is always recommended that expert tax advice is obtained in this regard.
If the grandparents do not already own shares in your care home trading business, there is the possibility of transferring some shares for a later settlement into a trust for the benefit of the grandchildren.
There are a couple of steps to achieve this, each with their own tax, valuation and commercial considerations.
The expert tax team at Hazlewoods would be delighted to discuss these tax planning opportunities with you; please get in touch with Rachael Anstee to find out more.
rachael.anstee@hazlewoods.co.uk
