Business Property Relief

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What is Business Property Relief ?

Business Property Relief can reduce the value of a business when calculating how much Inheritance Tax has to be paid. It was introduced to prevent the need for businesses to be sold in order to pay Inheritance Tax when an owner dies

It is therefore important that business owners are aware of this valuable relief and take full advantage of it. This brief guide highlights the key principles involved with Business Property Relief, though because of its complexities it is recommended that you take legal advice on your own circumstances. Our business lawyers will be happy to help you with this and our private client team is on hand to prepare a will for you that ensures the relief is maximised.

Who qualifies for Business Property Relief?

Business Property Relief applies to business property that falls within one of the defined categories of assets, which has been owned for a minimum period and isn’t excluded.

The categories

The categories of asset include:

  • A business or an interest in a business;
  • unquoted shares and shares in partnerships; and
  • assets personally owned by a shareholder or partner, but which are used by the business such as Land or buildings, machinery or plant.

The minimum period of ownership

Generally, you must have owned the asset for two years prior to the transfer. There are however exceptions, such as when an asset is passed from one spouse to another.

The exclusions

There are a number of exclusions to Business Property Relief, so its important to check the position with a professional advisor.

For instance Business Property Relief isn’t available in respect of a business, or shares in a company that is not carried on for gain.

Similarly, a business which only generates investment income will not attract Business Property Relief, so this could exclude residential or commercial property letting business and, arguably, furnished holiday letting businesses.

How we can help

This brief overview is merely intended to ‘flag up’ the existence of this valuable relief available to business owners. As with most tax law however, the devil is in the detail and the rules do frequently change, so if you do wish to take full advantage of the relief that is available then contact our business team on 0808 139 1606 or email us at [email protected]