fbpx

Search the ETC Tax Website

Request a callback

Callback Request

Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to call you back to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.
  • Sign-up to our newsletter

    Newsletter Main Form

  • This field is for validation purposes and should be left unchanged.
  • Request a callback

    Contact Form


    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.
  • Samsung, succession and tax

    9 November 2020

    Andy Wood

    Samsung An ‘astronomical’ tax liability?

    Samsung, the South Korean electronics giant hit, the headlines at the end of last month.

    However, this was not PR around its latest Galaxy handset. No, it was something of a different astronomical nature.

    Usually the world’s technological titans are in the press for ‘not paying their fair share’ or other similar soundbites. The beneficiaries of South Korea’s richest man, Lee Kun-Hee, have been left with a reported tax liability of $10bn. Most of this estate was made up of his shareholdings in Samsung.

    He was South Korea’s richest man with an estimated fortune of $20.7bn. Most of this estate was made up of his shareholdings in Samsung’s various entities.

    The country’s death tax can be as high as 60% for those inheriting shares meaning that Lee’s beneficiaries could owe as much as $10bn in tax.

    Yes, that’s almost as much as the GDP of Chad, since you’re asking!

    However, we are told that the beneficiaries of Mr Kun-Hee’s estate will not have to sell any of the shares (and potentially giving up control) to pay the tax man.

    It is anticipated that the Samsung Group of Companies will increase the payment of dividends to help fund the liability over a 5 year period. It seems to be that this assumption caused the share price of the Company to rise!

    UK Inheritance Tax (“IHT”) on shares

    What is the position in the UK?

    Where one has shares in an unquoted trading company then they should qualify for 100% Business Property Relief (“BPR”) after 2 years. This is regardless of the size of the shareholding.

    As such, the shares should not be liable to IHT on death or on a lifetime transfer subject to other conditions.

    This should mean that the beneficiaries of shares in a family business should not have to sell any of them to fund a tax bill.

    Quoted shares and BPR

    But what about quoted shares like Samsung?

    The position here is less generous. Broadly, if the shares are listed on a recognised exchange then one needs to have control of the Company to obtain BPR (and this is at a reduced rate of 50%).

    There is an important wrinkle here.

    Shares which are listed on AIM are considered to be ‘unquoted’ for the purposes of BPR. This means that Great Aunt Hortence could invest the £2m she has in her post office account in a basket of AIM shares (assuming they meet the other conditions) and, after 2 years, it would fall outside her estate*.

    I have spoken in the past about how the qualification of shares listed on AIM seems to be contrary to the policy behind BPR previously.

    Could this be tweaked in a future Budget, or would this have a deleterious effect on the value of the AIM market?

    *Note, AIM is a volatile market – I’m not saying this is a good idea!

    If you have any queries about this article then please do get in touch

    Get in touch with us today

    Call or email us any time or, simply fill out the contact form below and a member of our team will be in touch.

    Contact Form


    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.