There are several types of reliefs from Inheritance Tax (IHT), one of which is IHT
Business Relief. This can be a significant tax benefit for those with business interests, potentially offering either 50% or 100% relief from IHT on the value of business assets if certain criteria are met.
- 100% Business Relief can be claimed for a business, an interest in a business, or on shares in an unlisted company.
- 50% Business Relief is available for:
- Shares with more than 50% of the voting rights in a listed company.
- Land, buildings, or machinery owned by the deceased and used in a business they were a partner in or controlled.
- Land, buildings, or machinery used in a business and held in a trust that it has the right to benefit from.
Who does IHT business relief apply to?
This relief only applies if the deceased owned the business or asset for at least two years prior to their death.
However, there are limitations, for example, if the company primarily deals in securities, stocks, shares, land, buildings, or investments. In some situations, partial Business Relief might be possible.
Given its complexity, it is crucial to assess whether IHT Business Relief applies based on your specific circumstances.
Who cannot quality for IHT business relief?
You are unable to claim IHT business relief if the company:
- Deals with securities, stocks or shares, land or buildings, or in making or holding investments
- is a not-for-profit organisation
- is being sold, unless the sale is to a company that will carry on the business and the estate will be paid mainly in shares of that company
- is being wound up unless this is part of a process to allow the business of the company to carry on
Your are also not able to qualify for IHT business relief on an asset if
- The asset also qualifies for Agricultural relief
- It wasn’t used mainly for business in the 2 years before it was gifted or part of a will
- It isn’t needed for future use in the business
Contact Us
If your inheriting a business or in the process of transfering a family business and are unsure if your business qualifies for IHT business releif. Contact our specialist
tax team today where our team can advise you on the IHT obligations for theinhgeritance of your business or business assets.
Contact us today.