With recent reviews into Capital Gains Tax and Inheritance Tax now complete, could this be the time for family businesses to review their approach to succession planning?

If managed correctly, individuals and families who have created a large amount of wealth for themselves can see a substantially positive impact for their family dynamics and business through well-planned succession planning.

The shareholders in a family business can realise value in several ways, such as a;

1.  Family Buy Out (FBO) vehicle

An FBO offers a succession option that could be suitable for the family business when the next generation is being considered to acquire the business from the current shareholders, e.g. the parents.

2.  Company purchase of own shares

A company could look to purchase their own shares, although this process does involve stringent requirements in order to obtain the preferred capital treatment on shares being sold to benefit from tax rates of 10% or 20%.

3.  Extraction of dividend payments – followed by a gift of shares

Most simplistically, but typically more tax costly, shareholders have the option of extracting cash balances in the business via a payment of dividends, followed by a gift of shares to the next generation.

Get in touch

If you would like to discuss your options in relation to how to manage your succession planning strategy for your family business, please get in touch with our team on 01788 539000 or 0116 261 0061.


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