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Inheritance Tax relief for business property

Business property relief (BPR) is a valuable inheritance tax relief for business owners whether making a lifetime transfer or on death.

Key points


  • Business property relief is a valuable inheritance tax relief for business owners
  • Business owners may receive relief at either 100% or 50%, dependent on circumstances
  • Business property relief is available after an ownership period of two years

Types of property that qualifies

Inheritance tax (IHT) legislation (IHTA 1984) provides relief for certain types of business or business property included in either a lifetime transfer or the deceased’s death estate. Relief is available for business property anywhere in the world.

For deaths and transfers, on or after 6 April 1996, the categories of property which are capable of qualifying as relevant business property are broadly as follows with rate of relief:

  • Property consisting of a business or interest in a business: 100% relief
  • Control holdings of unquoted securities in a company: 100% relief
  • Unquoted shares in a company: 100% relief
  • Control holdings of quoted shares in a company: 50% relief
  • Land, buildings, machinery or plant used by a company controlled by the transferor or by a partnership of which the transferor was a member: 50% relief
  • Settled land, buildings, machinery or plant in which the transferor had an interest in possession and used in his business (This applies to lifetime transfers only): 50% relief
All statutory references are to IHTA 1984.

Business property relief/inheritance tax planning ideas


  • New investments into BPR-qualifying shares usually take two years to become exempt from inheritance tax
  • There is a three-year window, during which some or all of the proceeds resulting from the sale of a BPR-qualifying business can be invested back into BPR-qualifying assets. If such action is taken, the newly acquired BPR-qualifying assets should be immediately exempt from inheritance tax

Planning with business property relief is a specialist area, however, we offer a joined-up advice process with other professions such as Accountants and Solicitors.

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