Inheritance Tax

Family Business 

Succession and 

Inheritance Tax 

September 2016 

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International 

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 

0 

Document Classification: KPMG Confidential

Family Business Succession and Inheritance Tax 

in three minutes! 

" 

For entrepreneurs and 

family businesses time 

is precious and fleeting. 

Thoughts of mortality 

are rarely front of mind 

unless prompted by a 

health shock. But you 

will already be very 

aware that protecting 

the longevity of your 

wealth creation is 

important and ensuring 

a lasting legacy takes 

proper planning. Failing 

to plan can lead to 

unintended tax 

consequences and long 

term problems for those 

left behind. We hope to 

prompt a discussion 

with a KPMG specialist 

who can help bring 

clarity and objectivity 

to these challenging and 

sensitive issues. 



1 


Have a considered plan 

‘90% of family businesses have no 

proper succession plan’ 

‘62% would consider selling because of 

anticipated problems’ 

No entrepreneur would give up control of 

their own business easily and nor would 

they wish to give their children too much 

control too soon. There may be delicate 

concerns over particular family members 

and fears of divorces or second marriages. 

But for any smooth transition, careful 

planning and subsequent monitoring and 

review is needed. 

For every significant family asset the 

questions should be asked ‘who owns it, 

what is its purpose, who benefits from it, 

and who makes the decisions?’ 

Similarly, for the business – which family 

members own it, who drives it, who are 

the other stakeholders, who does it provide 

for? …And will it attract inheritance tax? 



2 


‘But the business will be covered by BPR, surely I 

can rely on that!’ 

Business Property Relief is very valuable 

and potentially provides exemption from 

Inheritance Tax for the family company. 

However over time, businesses and 

activities change. Significant amounts of 

surplus cash on balance sheets or 

investments that have built up over the 

years can mean that an unexpected IHT 

liability falls on the next generation. 

Furthermore, longer term strategies for 

growth, diversification and de-risking are 

likely to involve external investment as 

well as additional personal liquidity and 

assets that will not benefit from the relief. 

Tax is an important consideration but 

certainly not the only one 



3 


Protection of wealth is vital 

Having spent a lifetime establishing a business it makes sense to protect it for 

future generations. This might involve considering family trust arrangements, 

alternative ways to hold the company, non-family member management and 

generational considerations. 



4 


There may be simple savings from appropriate 

will drafting and efficient lifetime gifts 

Making the most of inheritance tax 

exemptions such as BPR and providing 

flexibility through the use of will trusts can 

be straightforward methods of leaving 

greater wealth behind. Furthermore 

planning at an early stage – using the nil 

rate band appropriately, making gifts out of 

income, and having appropriate insurance 

can add great value and trusts and other 

vehicles can be used to put assets into the 

hands of future generations without giving 

up control inappropriately. 

High profile cases in the media such as Rik 

Mayall and Roger Lloyd Pack demonstrate 

that without an appropriate will, significant 

unanticipated liabilities and disgruntlement 

can result. 



5 


Did we mention planning ahead? 

Advice begins with 

helping you 

understand and 

predict the wealth 

you need to fund your 

anticipated lifestyle. 

Once this is clear 

thoughts can turn to 

wider succession 

matters and the 

efficient protection 

and allocation of 

family wealth. Once 

a strategy is in place, 

regular review is 

essential to ensure 

that family changes 

and objectives are 

properly met. 



6 


What are other business owners doing and how 

can KPMG help? 

Our private client tax team are 

leading specialists in dealing 

with family businesses. We 

have a great track record of 

advising on the most effective 

succession plans, we can talk 

you through your available 

options to help find the best 

approach to meet your specific 

needs, and help ensure that you 

understand the tax implications. 

We can bring clarity and 

objectivity to these challenging 

and sensitive issues. 

If you feel you need to review 

or indeed create your 

succession plan, please get in 

touch and one of our advisers 

would be happy to attend a 

meeting free of charge. 



7 


Contacts 

For further information please contact: 

Simon Johnson 

Private Client Director, Midlands 

T: 0121 335 2330 

M: 07824 320677 

E: simon.johnson@kpmg.co.uk 



8 


Thank you 



9 


kpmg.com/uk 

The information contained herein is of a general nature and is not intended to address the 

circumstances of any particular individual or entity. Although we endeavour to provide accurate and 

timely information, there can be no guarantee that such information is accurate as of the date it is 

received or that it will continue to be accurate in the future. No one should act on such information 

without appropriate professional advice after a thorough examination of the particular situation. 

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of 

independent member firms affiliated with KPMG International Cooperative (“KPMG International”), 

a Swiss entity. All rights reserved. 

The KPMG name and logo are registered trademarks or trademarks of KPMG International. 

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Inheritance Tax

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