British Hotel Tycoon Purchases £6 Million Life Insurance Policy to Safeguard Fortune
Steve Perez, owner of an array of upscale restaurants, hotels, and Global Brands, a beverage corporation, has invested in a £6 million life insurance policy to protect his wealth from the impending inheritance tax increase announced by Rachel Reeves.
This strategic move aims to prevent the forced sale of his business empire upon his passing. Perez acknowledges that the proposed revisions to inheritance tax rules, including reduced relief for business assets, pose a significant threat to his legacy.
"At 68 years of age, my business faces a substantial tax burden from April next year," explains Perez. To ensure its continuity, not solely for his heirs but also for the employees and the community, he is taking out a £6 million life insurance policy.
Perez emphasizes the local significance of his business, established from humble beginnings into a 400-strong workforce. He expresses concern that its sale would likely result in foreign ownership or private equity acquisition, potentially neglecting local interests.
"Instead of reinvesting profits, I am compelled to divert funds to cover this policy, safeguarding against potential tax liabilities upon my demise while these laws remain in effect," laments Perez.
Perez exemplifies numerous British business leaders grappling with inheritance tax reforms. Previously, business properties were exempt from inheritance tax liability. However, changes effective April 2023 impose a 20% levy on properties valued over £1 million.
Industry leaders contend that these adjustments hinder investment and risk forcing family-owned businesses to liquidate if they fail to meet tax obligations. Farmers, particularly, have expressed outrage over the elimination of tax relief for agricultural properties exceeding £1 million.
Insurers report a surge in life insurance inquiries following the Budget announcement. Life assurance policies provide payouts upon the policyholder's death, while insurance policies cover events within a specified timeframe.
Perez's decade-long policy aims to provide financial protection against the inheritance tax liability. However, he anticipates that the initial £6 million coverage will be insufficient to fully cover the tax due at the time of his death.
"This is just the initial estimate," states Perez, "and I expect it will need to be increased to at least £10 million. The proposed tax structure disincentivizes business growth, as it will incur higher insurance premiums."
Perez's statement serves as a testament to the impact of inheritance tax changes on British businesses. The Treasury has been reached out to for comment.