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Close companies


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Close companies


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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Generally speaking, inheritance tax (IHT) is charged only on transfers of value by individuals and trusts. However, to prevent avoidance of the tax, the charge is extended to participators in close companies where:

  1. •

    a close company makes a transfer of value, or

  2. •

    the share capital or loan capital of a close company is altered, resulting in a loss in value to one or more participators

What is a close company?

A close company is defined, as it is for corporation tax, as a company under the control or ownership of five or fewer participators or of any number of directors who are participators. This includes, for the purposes of IHT, companies resident outside the UK. A participator is a person who in relation to a company has a share or interest in the income or capital of the company.

For a general discussion on close companies, see the Definition of a close company guidance note in the OMB module.

See also the Transfer of assets abroad code guidance note, in regard

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  • 23 Dec 2024 08:41

Home/ Tolley Tax Guidance/ Trusts and Inheritance Tax / GWR and other anti-avoidance

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