Options and tax implications for succession planning

It’s crucial that you understand the options available when succession planning.

You may need professional advice to understand some of the practical and legal steps required, as well as the tax consequences; this is where the CLA can help.

A good starting point is to look at our online succession planning hub. It contains our succession planning webinars, which are a helpful introduction to the tax and legal considerations applied to different family scenarios. You can also find relevant written advice resources such as handbooks, guidance notes and other articles. Our experts have created these to help ensure the process goes as smoothly as possible, to keep costs down and find a solution that works for you, your business and your family. Other CLA resources include the succession planning handbook, which has relevant and practical guidance for farming and landowning families that are making or reviewing their succession plans. It covers how to approach the process and what options are available, as well as advice on different business structures, tax considerations and the various legal documents required.

If you are entitled to one-on-one advice as part of your membership package, the CLA tax team can provide bespoke succession planning advice that is tailored to your individual circumstances. To do this, we need a lot of information so that we can understand fully what assets you have, what their values are (both now and when you acquired them), how they are used and what you want to achieve. To help you collate all this, we send a form to complete. It may look daunting, but it is a helpful tool, with questions that act as prompts so you can set out the information we need to consider.

Filling in this form and returning it to us with your recent business accounts and any partnership or tenancy agreements is an important part of the process.

Providing this detailed information and the documents means that we can assess:

● What the tax risks are

● Whether your assets are eligible for tax reliefs (considering both capital gains tax and inheritance tax)

● What you can do to mitigate tax and other risks as part of your succession planning.

We can also identify any problems with accounts and agreements; we regularly see issues with these, which need correcting to facilitate the effective running of the business, potential changes such as retirement and future claims for tax reliefs.

We will then be able to talk you through the options available, identify the tax implications and address any queries you have. We provide our advice in writing after our discussion so you can refer to it at a future date, if necessary.

The goal is to provide you with the information and advice needed so you can consider what you want to do and understand the likely tax implications.

Once you have decided how to proceed, you can speak to the other professionals who will need to be involved, such as a solicitor, accountant and land agent. They will be able to ensure your succession plan meets your needs and prepare the documentation necessary to implement it.

Our regional teams can also help you find the local professionals you need to put your plans in place.