Trusts and Inheritance Tax

BPR ― trading and investment businesses

Produced by Tolley
  • 21 Dec 2021 16:31

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

Introduction

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, s 105(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

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

Withholding tax

IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were also exempt from

22 Dec 2021 16:12 | Produced by Tolley in association with Anne Fairpo Read more Read more

Requirement for trust accounts

Duty to prepare trust accountsUnder the laws of England and Wales, trustees have a duty to account to the beneficiaries for their financial administration of the trust fund. This duty is established by a substantial body of case law. In the case of Armitage v Nurse, Millett LJ stated:“Every

19 Oct 2021 23:08 | Produced by Tolley Read more Read more

Employer Financed Retirement Benefit Schemes (EFRBS)

IntroductionA pension scheme that is not a registered scheme is known as an EFRBS. Since April 6 2006, the distinction between what were approved and unapproved pension schemes has been replaced with a distinction between registered and unregistered schemes.The position as it applies with effect

22 Dec 2021 14:33 | Produced by Tolley in association with John Hayward Read more Read more