SAVING MONEY ON TAX
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Entrepreneurs with wills can also save tax. Following death, assets passing to beneficiaries other than a spouse or a charity will be charged inheritance tax at 40% after allowing for the nil rate band for inheritance tax of £325,000. However, shares and other assets used in a trading business will generally qualify for 100% business property relief for inheritance tax purposes, if they have been held by the deceased for two years prior to death. This means they can be passed free of tax to beneficiaries.
In a tax-efficient will, a testator may choose to leave shares in a business or a business interest on discretionary trusts for children, with the rest of his estate passing to his spouse. In this way, the whole estate passes free of tax. Business property relief is not wasted as it would be if the business property is passed to an exempt beneficiary, such as a spouse.