By Tolley in association with Peter Rayney of Peter Rayney Tax Consulting Ltd

The following Trusts and Inheritance Tax guidance note by Tolley in association with Peter Rayney of Peter Rayney Tax Consulting Ltd provides comprehensive and up to date tax information covering:

  • BPR
  • Business property that qualifies for BPR
  • Business property that cannot qualify for BPR
  • Valuation issues
  • Withdrawal of business property relief

Business property relief (BPR) is a relief that reduces the taxable value of property on which inheritance tax is charged. The reduction will generally be available where a transfer of business property is made, or where a deceased estate contains business property.

The reduction will be at a rate of 50% or 100%, depending upon the type of business property concerned.

BPR is given automatically. It is not necessary to make a formal claim in order for BPR to apply. However, an intention to deduct BPR from the value of qualifying assets must be signalled on the inheritance tax account form IHT413  and the amount deducted needs to be shown.

IHTA 1984, s 104
Business property that qualifies for BPR

Property qualifies as business property if it meets two conditions:

  • the transferor must have owned the property for at least two years continuously before he transfers it or before he dies
  • the property must fall into one of the qualifying classes (see below)
The qualifying classes of business property (relevant business property)

Types of business property that qualify for 100% BPR include:

Type of propertyNotes
Property consisting of a businessTypically a sole proprietorship. Business property includes the value of all the assets

More on IHT reliefs: