Structuring Property Investments to Minimise Inheritance Tax Liability

The Challenge

Mr and Mrs Jones owned 50% each of the equity in a company that already owned a material amount of investment property. Inheritance Tax in relation to their shares in the company became an issue (with an estimated liability of £2m) so they asked Stratos how to plan around their holding.

The Solution

As the company already had material positive value in its equity the shares couldn’t be passed by Mum and Dad to their children without incurring Capital Gains Tax. Therefore, they adopted our advice which was to ‘Freeze’ their own equity in the company and give ‘Growth’ shares to the children.

The Value

This allows any future increases in the equity to accrue in the children’s estates, rather than theirs without trigging a current tax charge on the children or parents.