Family tax planning: did you know...?

If you are part of a family business, you may be interested to learn that there are many tax dynamics that are specific to your situation. This means that family business tax planning often needs to be treated in a different way to non family business tax planning. For example, many family businesses choose to operate as a company, whilst others choose the partnership business model instead. Both models are liable to tax in different ways. Therefore, family business tax planning is vital to ensure you don’t give more money to the tax man than is strictly necessary. In addition, any family business has a choice between paying salaries and bonuses, or dividends, to its members. Incomes and dividends are taxed in different ways, so it pays to find out which is the best option for you and your family. Family tax planning is particularly relevant when a business is passed down to the younger generation. If this happens on death, the beneficiary will be liable for inheritance tax, albeit at an improved rate thanks to the inheritance tax business property relief regime. However, if the property is transferred during life, it becomes exempt from inheritance tax after seven years has passed. Peter Lashmar, who runs an accountancy firm in Hampshire said: “Family tax planning throws up many different options that are specific to this type of arrangement. What suits one family business will not necessarily suit another one. But, whatever the circumstances, there is always a way to obtain the optimum level of tax efficiency. “Anybody who is conce ed about their family tax planning should seek the advice of a fully qualified and independent tax professional.” He added. You can find out more about family tax planning, as well as many other types of tax planning, by contacting Lashmars: www.lashmars.co.uk