Business relief for Inheritance Tax

It is possible that your estate will pay no IHT on the valuation of any business assets. The amount of relief available depends on the type of assets held at death. Your estate may be able to claim 50% or possibly 100% relief.

You can get 100% Business Relief on:

• a business or interest in a business,
• shares in an unlisted company.

You can get 50% Business Relief on:

• shares controlling more than 50% of the voting rights in a listed company,
• land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled,
• land, buildings or machinery used in the business and held in a trust that it has the right to benefit from.

You can only get relief if the deceased owned the business or asset for at least two years before they died.

What doesn’t qualify for Business Relief?

You can’t claim Business Relief if the company:

• mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments,
• is a not-for-profit organisation,
• is being sold, unless the sale is to a company that will carry on the business and the estate will be paid mainly in shares of that company,
• is being wound up, unless this is part of a process to allow the business of the company to carry on.

You can’t claim Business Relief on an asset if it:

• also qualifies for Agricultural Relief,
• wasn’t used mainly for business in the 2 years before it was either passed on as a gift or as part of the will,
• isn’t needed for future use in the business.

If part of a non-qualifying asset is used in the business, that part might qualify for Business Relief.

For example, if you use one room in a building as a shop and the other rooms are used as your home, the shop will qualify for Business Relief, but the rooms will not.

Relief for agricultural property

You may be able to get Business Relief on a transfer of agricultural property (e.g., farmland, buildings or farm equipment) which isn’t eligible for agricultural relief.

Please call if you need more information on this topic or any other aspect of your family estate tax planning.