Business Property Relief
Our easy explanation to Business Property Relief (BPR)
Business Relief (BR)* provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets at a rate of 50% or 100%.
Because standalone BR investments are not part of HMRC’s Venture Capital Schemes (such as EIS, VCT etc), there is generally no upfront tax relief for investing in such schemes, nor any taxfree dividends/capital gains. Often (although not always) any returns from the investment are structured as returns of capital, and are subject to CGT accordingly. Unless “replacement business property”, any relevant property must be held for at least two years in order to qualify for relief.
*now termed Business Relief, but still commonly referred to as Business Property Relief (BPR)
| A business or an interest in a business | 100% |
| Unquoted securities which on their own or combined with other unquoted shares or securities give control of an unquoted company | 100% |
| Unquoted shares | 100% |
| Quoted shares which give control of the company | 50% |
| Land or buildings, machinery or plant used wholly or mainly for the purposes of the business carried on by a company or partnership | 50% |
| Land or buildings, machinery or plant available under a life interest and used in a business carried on by the individual | 50% |
Because standalone BR investments are not part of HMRC’s Venture Capital Schemes (such as EIS, VCT etc), there is generally no upfront tax relief for investing in such schemes, nor any taxfree dividends/capital gains. Often (although not always) any returns from the investment are structured as returns of capital, and are subject to CGT accordingly. Unless “replacement business property”, any relevant property must be held for at least two years in order to qualify for relief.
The above tax incentives across all schemes often enhance the returns and help to reduce risk to investors’ capital. However, investors must consider the investment risks and opportunities before they decide to invest and should seek suitable professional advice. Tax treatment is dependent on the circumstances of each individual and may be subject to change in the future.