Trust transfer plan

We act for a married couple. They own their successful company in equal shares and are about to sell it for a considerable sum in cash.

As part of an inheritance tax mitigation plan it is proposed that – before the sale – they will each transfer such a holding (simple division) to a discretionary trust that will produce £325 000 on the subsequent sale. One transfer for each of their two daughters.

Holdover for capital gains tax purposes will not be claimed and tax at 10% will be paid as would otherwise be the case. Soon after the transfer the trustees will sell each of the shareholdings for £325 000.

For inheritance tax purposes the seven-year period will in effect have been removed because business property relief will apply to the transfer to the trust. We have also been working on the basis that...