The new company bought out the main director for an amount that was felt to be fair to both sides and was sufficient for the seller’s long and comfortable retirement. This secured the future of the business and, meant the tension between father and son was reduced.
The sale of the father’s shares was funded by the company over an extended period, and the amount received was only taxed at 10%.
The three grandchildren’s private school fees were also funded by the company using their personal allowances, helping the owner’s daughter to also benefit from the family business.
The £160,000 of value gifted into the trust with interest provided £210,000 of school fees. These fees would have required £280,000 of dividend payments if the parents of the children had used taxed income.