UK Law and Practice Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
Family investment companies are increasingly popu - lar as a conduit for passing on the benefit of invest - ment assets within a protected environment controlled by the founder of the company (as discussed in 2.6 Transfer of Assets: Vehicle and Planning Mecha- nisms ). The use of prenuptial and postnuptial agreements has also increased in recent years. Less well appreciated is the importance of living-together agreements in respect of cohabiting partners for whom there is no statutory framework for division of assets on separa - tion. Nuptial and living-together agreements are often used alongside other asset preservation tools, such as trusts and FICs, to add an additional layer of protec - tion when family business wealth is being passed on. 4.2 Succession Planning Family businesses in the UK rely on a robust gov - ernance structure to address areas of sensitivity and complexity caused by family dynamics. This includes regulating management and ownership succession, conflicts of interest, and differing income expectations among family members. Some larger family businesses use a two-tier board structure to manage overall business strategy, and well-established businesses may have multiple gov - ernance entities such as: • a family council; • a family assembly; • a shareholder assembly; • a family office; • a charitable foundation; and • a venture capital or enterprise fund. These entities help manage different aspects of family and business governance. Tax-efficient business succession (in the case of trad - ing rather than investment holding businesses) has long been facilitated by the availability of 100% APR and BPR. It has not been uncommon for handing-over of family business assets to be deferred until death,
particularly given the free uplift on death for CGT pur - poses (see 2.5 Transfer of Property ). However, the fact that APR and BPR at 100% is due to be restricted from 6 April 2026 is causing family busi - ness owners to accelerate their business succession planning, seeking to limit future IHT exposure relying on holdover relief in order to alleviate CGT liabilities that would otherwise arise (see 1.5 Stability of Tax Laws ). A careful review of the business structure as well as monitoring activities and assets can maximise BPR for shareholders, partners and sole traders. Other popular asset protection measures for family business owners – particularly those holding invest - ments rather than wholly or mainly trading – include: • creating different classes of shares; • carrying the right to future growth without passing on control to the next generation; • constitutional documents that restrict the transmis - sion of shares outside the bloodline; • the fragmentation of shareholdings among multiple family shareholders; and • depressing the value of those minority holdings in the context of any third-party claims. 4.3 Transfer of Partial Interest On transfer of a partial interest in an entity, the value for tax purposes may be affected by a minority dis - count. There are, however, “related property” rules for IHT purposes – for example, where similar property (such as shares in the same company) is owned by a spouse or civil partner. In these circumstances, an asset may have a higher value than its standalone value, as it will be based on a proportionate value of an overall larger or majority shareholding or group of assets.
5. Wealth Disputes 5.1 Trends Driving Disputes
The accumulation of wealth available for redistribution including high property values in the UK frequently
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