Business property relief (BPR)

By Tolley
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Business property relief (BPR)
  • Definition of relevant business property
  • Rate of relief
  • Loan stock
  • Ownership requirements ― general rule for BPR to apply
  • Exceptions to the general rule
  • Contracts for sale
  • Excepted assets
  • What is a trade or business for BPR?
  • Furnished holiday lettings (FHLs)
  • Clearance procedure

BPR reduces the transfer of value for inheritance tax purposes. BPR is given before any annual exemptions.

IHTA 1984, s 104

BPR applies to lifetime transfers as follows:

Value transferredX
Less: BPR @ 50%/100%(X)
 X
Less: annual exemptions(X)
Chargeable transferX

BPR is also available to reduce the value of business assets in a death estate. BPR is given automatically if the conditions for relief are satisfied. There is no formal requirement to make a claim.

See also Simon’s Taxes Division I7.1 (subscription sensitive).

Definition of relevant business property

BPR is only given if a donor makes a transfer of ‘relevant business property’. The definition of relevant business property is given at IHTA 1984, s 105.

Transfers of a business or a share in a partnership qualify for BPR, but it is not available on the transfer of a single business asset.

Therefore if a sole trader transfers the whole of his business into a discretionary trust, the gift will qualify for BPR. However if he transfers part

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