Capital Acquisitions Tax for Business Owners
As a business owner you have probably created a successful and profitable business and you and your family enjoy a comfortable lifestyle.
With the changes to Capital Acquisitions Tax announced in the recent Budget, now might be a good time for you to take a look at the implications of CAT especially if you are thinking about passing on your business to your family when you die. Inheritance tax or Capital Acquisition Tax can become a real burden when financial resources are tied up in a business
There are some tax free thresholds but these depend on the recipient’s relationship to the business owner.
Did you know?
· Your children can only inherit €310,000* from you tax free.
· Anything in excess of this, per child, is taxable at 33%.
· Leaving assets to your children may result in them having to pay Inheritance Tax.
Source: Capital Acquisitions Tax Consolidation Act 2003 (as updated). *Group 1 Threshold available from 12 October 2016.
If you do not plan ahead, your family could be faced with a difficult decision between having to sell the business or borrow the money to pay the tax liability.
There are a number of solutions including taking out a life assurance policy to cover the cost of the inheritance tax liability thus ensuring that the business won’t have to be sold off.
Every business should have a succession plan in place, even if retirement or sale is not a current prospect.
For further information contact Michael on 086 8440541 or email email@example.com
Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland.