How To Transfer A Business To A Family Member UK

Selling your business can often be exciting but also quite daunting. Instead of looking to sell the business to a third party, you may have considered transferring it to a family member. In this article, how to transfer a business to a family member UK, we take a look at the process and mechanism involved.

Free Initial Telephone Discussion

For a free initial discussion on how we can help you to transfer a business to a family member, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help prevent you from making mistakes, saving you money and time and also avoiding the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.

What is the process involved?

The key to a successful management transition is often down to effective succession planning. This process could start many years before you intend to step down. It is good business practice to include a written succession plan within your overall business plan. The plan should include:

• Key goals
• A timetable for the transfer from start to finish
• A contingency plan if things don’t go as planned or circumstances change.

It’s particularly important that you allow your successor an adequate training period. This time can be used for hands-on training or a more structured form of training. Business development and leadership skills should also be included.

One approach to managing the training programme is for your successor to gain experience in other businesses. This allows them to gain independence and bring fresh skills and ideas to the business. It also allows them to make mistakes at someone else’s expense.

You might also allow them to gain knowledge of all aspects of your business by spending time working in each area of it. A key advantage of this method is that the successor is also meeting – and possibly being trained by – your key personnel.

Also consider whether it’s best for you to phase in your departure by gradually transferring some key responsibilities to your successor or possibly reducing the days you work in the business.

What are the Tax implications of transferring a business to a family member?

Entrepreneurs’ relief

Entrepreneurs can claim relief on gains made on the disposal of all or part of a business, or a disposal of a business’ asset after a business has ceased. The relief gives an effective rate of 10 per cent on all gains on qualifying assets.

Inheritance tax reliefs

You may qualify for business-property relief from inheritance tax if you sell or pass to relatives:

• your business
• an interest in your business – your share of a partnership, for example
• shares in your limited company

This should allow you to make such transfers free of inheritance tax for at least two years, even if you don’t live for seven years from the transfer date.

Capital Gains Tax

If you dispose of your business to a relative, other than your spouse or civil partner, you may have to pay Capital Gains Tax on any gains made on these ‘assets’. Note that the open market value of the assets of the business may be used in calculating the taxable gains if the disposal of an asset is for less than this value, or for something that cannot be valued.

You may be able to defer (hold over) Capital Gains Tax, meaning your successor will pay it if and when the gain is released in the future.

How we can help

We have a proven track-record of helping clients transfer their businesses to family members, no matter the size. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner and support and advise you with all the negotiations. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.

How to Contact our Corporate Solicitors

It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Corporate, News Tagged as