IHT on Family Home and Property

[vorabj]

I own a building - shop on the ground floor and 2 flats on the upper part (Market Value £800,000 total with shop worth say £400,000 and the flats worth £200,000 each)

The shop is used rent free by partnership business. The business is a trading partnership consisting of 4 equal partners.
The 2 flats have been rented out and the rental income less outgoings are declared on my tax return.

In addition I own a family home with no outstanding mortgage and now worth £650,000.

I have decided:

First by deed - transfer building and home into equal joint ownership of wife and myself.

Then For IHT purpose, introduce the shop into the business via a partnership deed
- such that on its disposal - the share of capital proceeds would be 45% each to my wife and myself and 5% each to our 2 children. Thus in effect retaining 45% each and gifting 5% of the 50% to our children. The value gifted would be - 5% x 50% X £400,000 = £10,000 which would be exempt under annual CGT allowance. Also in this way the shop would be now eligible for 100% BP relief instead of current 50%.

The 2 flats (now jointly owned) - are being transferred into trust - using up the £200,000 of IHT threshold - such that hold over CGT relief
would be available on winding up the trust and transferring to the beneficiaries. After surviving 7 years the £200,000 would fall out of IHT and full relief re-instated.

Not sure of how to deal with the house - as would like to gift this away too.

Any suggestion or comments on above proposal is appreciated.

[section 44]

in this way the shop would be now eligible for 100% BP relief instead of current 50%.

Why 50% BPR?

[vorabj]

Because shop used for business purpose - asset used in business eligible for 50%