Business Property Relief – BPR

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    Business Property Relief (BPR) is a widely available yet sometimes under used means of minimising inheritance tax liability. BPR is an inheritance tax (IHT) relief available against “relevant business property” transferred during a person’s lifetime or on their death.

    It reduces the chargeable value for IHT by 50 per cent or even 100 per cent depending on the type of business property involved and provided that certain conditions are fulfilled.

    A 100 per cent reduction in value applies to:
    sole businesses and partnership interests (including professions and vocations); and unquoted voting securities and shares (including Alternative Investment Market securities) of a private or family company controlled by the transferor (i.e. the person making the gift).

    A 50 per cent reduction in value applies to:
    quoted voting shares in or securities of a company controlled by the transferor; any land or buildings, machinery or plant owned by the transferor and used mainly for business by a company controlled by the transferor or by a partnership; or certain settled property.

    Most business will be covered but there are some exceptions. For example the business carried on must not wholly or mainly deal in securities, stocks or shares, land or buildings, or wholly make or hold investments.

    Nor must the business that is transferred be subject to a winding up order (whether voluntary or compulsory) or be in the process of liquidation unless this is part of a process of reconstruction, which is completed no longer than a year after the transfer of value.

    Generally speaking property will not qualify for relief unless it falls into one of two categories.

    It must have been owned by the transferor for the two years immediately preceding the transfer. Or it must have replaced other property, with the earlier and replacement properties being owned by the transferor for two years falling within a five year period prior to the transfer.

    Again, there are some exceptions.

    With a carefully drafted Will and appropriate lifetime planning a client can ensure that the
    maximum benefits and reliefs are passed to their family or other beneficiaries. For example, it may be more sensible to pass business property to children rather than a spouse.

    Another option may be to place the property into trust.

    To be certain of BPR the property can be transferred into a Discretionary Trust to secure the relief immediately. This route could be used if it is thought that the rules regarding BPR may change and no longer cover the assets on the death of the transferor.

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    Matt Walkden Will Writer

    About Matt Walkden

    I am a Professional Will Writer and I offer a small number of other products that complement my Will Writing such as Lasting Power of Attorneys (LPA’s), Fixed Price Estate Administration, often called Probate and some Property Products such as changing a family home from Joint owners to Tenants in Common.

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