Tax Rules Regarding Share Valuations

One of the trends among family businesses during the Covid-19 pandemic has been a renewed interest in succession planning.

This interest has been sparked by business owners taking stock of their own personal circumstances and falling profitability in many businesses. Taxes arising from inter-generational transfer of assets are levied based on the market value of the assets at the point in time of the transfer, reduced asset values result in lower tax bills. Reduced asset values coupled
with beneficial tax reliefs that allow succession planning (e.g. retirement relief and business asset relief), now represents a favourable time to undertake such planning.

This article will focus on a high-level basis on the main tax considerations when undertaking the valuation
of shares in a family-controlled company; this article will not focus on valuation methodologies.

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