BPR ― trading and investment businesses

Produced by Tolley

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • BPR ― trading and investment businesses
  • Introduction
  • Relevant business property
  • ‘Wholly or mainly’
  • Furnished holiday lets (FHLs)
  • Other businesses
  • Exemption for qualifying holding companies
  • Excepted assets
  • Determining BPR status of certain corporate structures

BPR ― trading and investment businesses


The basic qualification rules for business property relief (BPR) are illustrated in the Flowchart ― trading or investment business for BPR purposes.

For an overview of BPR, see the BPR overview guidance note.

Relevant business property

The main categories of relevant business property are set out in IHTA 1984, s105(1). In broad terms the legislation is aimed at businesses that are wholly or mainly trading, but the scope of the relief is framed negatively. Thus, all businesses qualify unless they are wholly or mainly:

  1. dealing in shares or securities

  2. dealing in land or buildings

  3. making or holding investments

A business engaged in genuine property development should qualify (this is not an investment activity).

The shares in a holding company do not constitute an excluded business, unless the subsidiary companies themselves are excluded businesses. In other words, the shares in a holding company do qualify for BPR if the subsidiary companies are engaged in qualifying trades.

See also Simon’s Taxes I7.112.

‘Wholly or mainly’

Wholly or mainly means more than 50%.

In order to ascertain whether a business consists wholly or mainly of one or more of the excluded business activities, it is necessary to look at the business as a whole along with the activities it is actually engaged in and to consider a list of factors, including:

  1. the relationship between the various activities. For example, the letting of cottages on a farm to holiday makers may be subsidiary to the main farming activities being carried out

  2. the way in which the activities were conducted. Were the investment activities carried out on a commercial basis and in a business-like way?

  3. the profit derived from the various activities

  4. the turnover derived from the various activities

  5. the capital employed in the various activities

  6. the time spent by the employees and consultants on the various activities

In George, the court established some important principles to consider when determining the status of the business:

  1. firstly, it is important to

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