Commentary

I7.112 BPR and investment businesses generally

IHT, trusts and estates

I7.112 BPR and investment businesses generally

I7.112 BPR and investment businesses generally

Excluded from the definition of relevant business property, and therefore from the relief, are undertakings where the business carried on consists wholly or mainly of:

  1.  

    (a)     dealing in securities, stocks or shares

  2.  

    (b)     dealing in land or buildings, or

  3.  

    (c)     making or holding investments1

Although businesses mainly engaged in property holding are excluded from the relief, a business carrying on a genuine building and construction business holding a number of properties (eg houses or plots awaiting development) as stock in trade can qualify for BPR. The nature of the business at the time of the transfer is important. Therefore a business which started as a housebuilder but which at the time of the transfer had not built any houses recently and was selling off its landbank would not qualify for relief2.

If an undertaking is classed as mainly a dealing or holding operation, it should be noted that the entire business is disqualified from receiving BPR. In borderline cases this can produce a startlingly different result from a situation where the business does just qualify for the relief, because in that case the whole of the business would qualify for relief subject only to the exclusion of the excepted assets (see I7.120A)3. In the case of a sole trader this restriction is unlikely to be a problem. It should be possible to keep the qualifying and non-qualifying activities separate to avoid total loss of relief. For example, if a sole trader runs two activities together as

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