Business Property Relief


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Business Property Relief

In the United Kingdom, the reduction or elimination of inheritance tax on the transfer of some types of property used for business purposes. For example, shares in unquoted companies in which the transferor had majority control are not subject to an inheritance tax because of business property relief. Likewise, land and machinery used primarily for a business before the transfer are taxed at half the ordinary rate.
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She can leave them again in her will and they will continue to enjoy Business Property Relief. This arrangement, known as 'double dipping,' essentially provides the opportunity to claim Business Property Relief twice and can be extremely valuable for business owners.
For inheritance tax, property owners would usually have a good claim for Business Property Relief (BPR), but I cannot see how BPR can survive once such properties are taxed as investments again and the capital gains relief is withdrawn.
AIM shares are currently treated as "unquoted" for IHT purposes, meaning that, if all other conditions are met, they will rank for full Business Property Relief (BPR) when Inheritance Tax is under consideration.
However, as a business asset this should be eligible for 100 per cent agricultural property relief or business property relief. The risk is that at your death the 100 per cent relief will not be applicable.
IF you are making a gift of a business asset to a son or daughter, remember to claim Business Property Relief from Inheritance Tax.
Here we saw the executors of the estate successfully claim Business Property Relief ("BPR") on a livery.
After two years' ownership, commercial forests have 100 per cent Business Property Relief from inheritance tax and timber sales are free of income or capital gains tax.
These include business property relief, agricultural property relief, the purchase of AIM shares, setting up trusts, and lifetime gifts made in the seven years immediately before death.
However, this in itself is a balancing act, as many of the trading tax reliefs (capital gains tax entrepreneurs' relief and inheritance tax business property relief to name but two) rely on there not being 'substantial' investment activities.
He said:: "The quickest way of making a significant dent in your inheritance tax liabilities is to invest in assets that qualify for Business Property Relief (BPR), as this will give you relief from inheritance tax after just two years."
He did not, however, have the space to extol the virtues of investing in assets that qualify for Business Property Relief (BPR), which is another effective way of reducing inheritance tax liabilities.
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