Not every investment or interest in a business will qualify for Business Property Relief (BPR), but BPR will typically be available for:
- Shares in an unquoted qualifying company, even a minority holding
- Shares in a qualifying company listed on the Alternative Investment Market (AIM)
- An unincorporated qualifying trading business, or an interest in once, for example a partnership.
However, simply being a business is not enough to secure the relief. Instead, the business must satisfy a much higher bar and be a trading business.
There is no Business Property Relief if the business or company is one of “wholly or mainly” in dealing in securities, stocks or shares, land or buildings in the making or holding of investments. As such, a business which is dealing in land, which is a trade at the basic level, will not qualify for BPR.
Once the requirements have been met, it may be possible to get BPR of either 50% or, in somes cases, 100% provided the deceased owned the business or asset for at least 2 years prior to death.
As a result of BPR and also Agricultural Property Relief (APR) it is possible to pass on many businesses entirely free of Inheritance Tax. There is no limit to to the exemption and so it theoretically it could be used to exempt an estate worth billions of pounds from paying Inheritance Tax. So, the relief is extraordinarily valuable but there are practical obstacles to making use of it such as you may wish to retire from owning a business before you die. There are solutions to this which our lawyers can advise you upon.
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