There are ways to claim Inheritance Tax relief on the business assets in an estate. Find out what qualifies as an asset and how to give away business assets or property.
BUSINESS RELIEF: Getting it can reduce the value of a business or its assets. So, it would be most important when working out liabilities for Inheritance Tax.
For Inheritance Tax purposes, your estate would include any ownership of a business, or a share of it.
But, there are ways to get Business Relief of either 50% or 100% on some of the assets in the estate. As a rule, you can pass them on:
The role would fall to the executor of the will or the administrator of the estate. As such, you may be able to claim Business Relief while valuing the estate of someone who has died.
You would need to fill in two separate forms:
When you calculate relief at 50% you must use the market value of the business or the asset. Some of the items you can claim relief on include buildings, machinery, property, and unlisted shares.
In most cases, you would be able to get 100% Business Relief on:
In most cases, you would be able to get 50% Business Relief on:
Note: Business relief for Inheritance Tax would only apply if the deceased person owned the business or the asset for at least two (2) years before they died.
You would not be able to make a claim for Business Relief if the company:
There are other circumstances whereby you cannot claim Business Relief on an asset, such as if:
Note: In some cases, part of a non-qualifying asset used in the business may also qualify for Business Relief.
An Example: You use one room in a building as shop premises. You use the other rooms as your home.
In this example, the shop would qualify for Business Relief Inheritance Tax. But, the other rooms in the building would not.
You might get Business Relief on a transfer of agricultural property that does not qualify for agricultural relief. Typical examples would include buildings, farmland, and farm equipment.
It is possible to give away business assets or property while you are still alive. Providing they still qualify, the estate can get Business Relief on Inheritance Tax.
So, what happens if someone gives away business property or assets? To keep the relief, the recipient must keep them as a going concern until after the death of the donor. As the recipient you would be able to:
Not all gifts count towards someone's estate for Business Relief Inheritance Tax purposes. A gift made more than seven (7) years before the death of the donor would not count. Read further information on Inheritance Tax rates and rules.
Business Relief for Inheritance Tax in the United Kingdom