Future-proofing capital growth in a £250m property group
Two brothers owned a £250m privately held property investment group and wanted to plan for the next generation while managing their potential inheritance tax exposure.
We developed a succession structure that allowed them to retain control while transferring a share of the company to their children.
By applying appropriate discounts to the minority shareholdings and using growth shares, the structure separated the value built up by the brothers from the future growth of the business.
The result was a clear and sustainable route for succession, allowing the next generation to benefit from future growth while protecting the existing family wealth and maintaining the stability of the business.
The Challenge
Two brothers in their late sixties owned a £250 million privately-held property investment group. With an eye to the future, they wanted to plan for succession and manage their inheritance tax (IHT) exposure.
Passing wealth to the next generation is never simple, especially when it involves complex corporate structures and significant assets.
We advised the brothers to gift less than 10% each of the company and were able to apply a significant discount to the value of the minority shareholding.
Whilst this crystallised a capital gain payable now, the brothers were happy to pay CGT rates on a low valuation. This also reduced their individual shareholdings in the group below 50%, which from an IHT perspective is optimal.
What we did
We developed a comprehensive estate and succession planning structure that addressed both immediate and future tax considerations. Our approach included:
- Applying discounts on share valuations to reduce the tax impact of gifting
- Freezing the value of existing shares and issuing new growth (or ‘flowering’) shares to the next generation, which have little or no value now but will attract all the future growth in value in the company
- Ensuring all steps were compliant, efficient, and aligned with the family’s long-term objectives and maintaining control for the brothers in both the short term and long term
The structure allowed the brothers to pass on future growth rather than current value, making the transition smooth, sustainable, and tax efficient
The result
The brothers achieved their goal of:
- Protecting family wealth for the next generation
- Crystallising a small capital gains exposure through careful structuring and share valuation discounts that the brothers were happy to crystallise now
- Creating a clear path for succession that gives their children ownership of future growth without destabilising the existing business
A thoughtful and forward-looking plan that ensures a legacy built over decades can continue efficiently, compliantly, and securely.
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