Involving your family
As long as it can be justified commercially, you can employ family members in your business. They can be remunerated with a salary, and possibly also with benefits such as a company car or medical insurance. You can also make payments into a registered pension scheme.
Family members may also be taken into partnership, thereby gaining more flexibility in profit allocation. Taking your non-minor children into partnership and gradually reducing your own involvement as their contribution increases can be a very tax-efficient way of passing on the family business. Of course, you should be aware that this could put your whole family wealth at risk if the business were to fail.
It is worth noting that HMRC may challenge excessive remuneration packages or profit shares for family members. So seek our advice first. In most cases, if you operate your business through a trading limited company. Under current tax law, you can pass shares on to other family members and thus gradually transfer the business with no immediate tax liability.
However, a tax saving for the donor usually impacts on the donee. You need to steer clear of the ‘settlements legislation’, so again, contact us for advice before taking any action.