Wealthy parents rush to give children their assets as tougher UK inheritance tax rules loom

"John Spencer, the director of GPS Marine, a marine infrastructure specialist based in Rochester, Kent, is one of many entrepreneurs taking advantage of tax rules that allow wealth to be given away prior to death to reduce a possible IHT bill. Gifts made seven years before someone dies are not subject to IHT, while those given three to seven years before death are taxed on a sliding scale known as taper relief. The rate reduces each year from 32% to 8%."

"It is one way of cushioning the looming loss of two major tax reliefs: business property relief (BPR) and agricultural property relief (APR). The changes prompted thousands of farmers from across the country to protest in London. Big family enterprises, which previously did not have to pay any IHT when the business was handed to the next generation, will face tax of 20% on its value above 1m, starting from next April."

Rumours of a wealth tax and tougher inheritance tax (IHT) rules are prompting wealthy parents in Britain to transfer assets and hand parts of businesses to their children decades earlier than planned. Gifts made seven years before death escape IHT; gifts made three to seven years before death are taxed on a taper relief that reduces rates from 32% to 8%. The loss of business property relief (BPR) and agricultural property relief (APR) is increasing pressure on family enterprises. Large family businesses will face 20% tax on value above £1m from next April. Owners are splitting holdings, gifting sums to heirs and delaying investment.

Read at www.theguardian.com