{"id":8218,"date":"2023-06-10T09:10:44","date_gmt":"2023-06-10T09:10:44","guid":{"rendered":"https:\/\/www.theukrules.co.uk\/?page_id=8218"},"modified":"2023-09-18T04:55:17","modified_gmt":"2023-09-18T04:55:17","slug":"business-relief-for-inheritance-tax","status":"publish","type":"page","link":"https:\/\/www.theukrules.co.uk\/rules\/legal\/death\/business-relief-for-inheritance-tax\/","title":{"rendered":"Business Property Relief for Inheritance Tax Purposes in UK"},"content":{"rendered":"<p><strong>BUSINESS RELIEF<\/strong>: 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.<\/p>\n<p>For Inheritance Tax purposes, your estate would include any ownership of a business, or a share of it.<\/p>\n<p>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:<\/p>\n<ul>\n<li>While the owner of business is still living.<\/li>\n<li>As part of their last will and testament.<\/li>\n<\/ul>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>How to Claim Business Relief<\/h2>\n<p>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 <a href=\"\/rules\/legal\/death\/valuing-an-estate-when-someone-dies\/\">valuing the estate of someone who has died<\/a>.<\/p>\n<p>You would need to fill in two separate forms:<\/p>\n<ul>\n<li><a href=\"https:\/\/www.gov.uk\/government\/publications\/inheritance-tax-inheritance-tax-account-iht400\" target=\"_blank\" rel=\"noreferrer noopener\">Inheritance Tax account (IHT400)<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/government\/publications\/inheritance-tax-business-and-partnership-interests-and-assets-iht413\" target=\"_blank\" rel=\"noreferrer noopener\">Inheritance Tax: business and partnership interests and assets (IHT413)<\/a><\/li>\n<\/ul>\n<p>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.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>Assets that Qualify for Business Relief<\/h2>\n<p>In most cases, you would be able to get 100% Business Relief on:<\/p>\n<ul>\n<li>A business or interest in a business.<\/li>\n<li>Shares in an unlisted company.<\/li>\n<\/ul>\n<p>In most cases, you would be able to get 50% Business Relief on:<\/p>\n<ul>\n<li>Buildings, land, or machinery owned by the deceased person (if used in a business that they controlled or were a partner in).<\/li>\n<li>Buildings, land, or machinery used in the business (held in a trust that it has the right to benefit from).<\/li>\n<li>Shares which control more than 50% of the voting rights in a listed company.<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: 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.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>When You Can&#8217;t Claim Business Relief<\/h2>\n<p>You would not be able to make a claim for Business Relief if the company:<\/p>\n<ul>\n<li>Deals &#8216;mainly&#8217; with land or buildings, securities, stocks or shares (or making or holding investments).<\/li>\n<li>Is being sold. An exception may apply if the sale is to another company that will carry on the business and the estate gets paid mainly in shares of that company.<\/li>\n<li>Is being wound up. An exception may apply if it is part of a process to allow the business of the company to continue trading.<\/li>\n<li>Is a not-for-profit organisation.<\/li>\n<\/ul>\n<p>There are other circumstances whereby you cannot claim Business Relief on an asset, such as if:<\/p>\n<ul>\n<li>It qualifies for <a href=\"https:\/\/www.gov.uk\/guidance\/agricultural-relief-on-inheritance-tax\" target=\"_blank\" rel=\"noreferrer noopener\">Agricultural Relief for Inheritance Tax<\/a> as well.<\/li>\n<li>There is no future use for the asset as part of the business.<\/li>\n<li>Its main use was not for the business during the two years before it got passed on as a gift or as a part of the will.<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: In some cases, part of a non-qualifying asset used in the business may also qualify for Business Relief.<\/p>\n<div class=\"content-inner-block\">\n<p><strong>An Example<\/strong>: You use one room in a building as shop premises. You use the other rooms as your home.<br \/>\nIn this example, the shop would qualify for Business Relief Inheritance Tax. But, the other rooms in the building would not.<\/p>\n<\/div>\n<p><\/p>\n<h3>Business Relief for Agricultural Property<\/h3>\n<p>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.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>Giving Away Business Assets or Property<\/h2>\n<p>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.<\/p>\n<h3>Getting Business Relief on a Gift<\/h3>\n<p>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:<\/p>\n<ul>\n<li>Get the relief, providing the donor owned the business or the asset for at least two years before the date given.<\/li>\n<li>Replace the assets (e.g. machinery) or the property. But, a replacement must be of equal value if used in the business.<\/li>\n<\/ul>\n<p><\/p>\n<h3>When a Gift is No Longer Liable for Inheritance Tax<\/h3>\n<p>Not all gifts count towards someone&#8217;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 <a href=\"\/rules\/legal\/death\/inheritance-tax\/\">Inheritance Tax rates and rules<\/a>.<\/p>\n<p><strong>Note<\/strong>: An asset or a property may increase in value during the time that you own it. If so, selling, exchanging, or disposing of it, means you may be liable for <a href=\"\/rules\/employment\/taxation\/capital-gains\/cgt-overview\/\">Capital Gains Tax<\/a> or <a href=\"\/rules\/employment\/taxation\/income-tax\/overview\/\">Income Tax<\/a>.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"updated-data\"><strong>Business Relief for Inheritance Tax in the United Kingdom<\/strong><br \/>\n<time datetime=\"2022-01-01\">Last Updated 2022<\/time><\/div>\n","protected":false},"excerpt":{"rendered":"<p>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&hellip; <a class=\"more-link\" href=\"https:\/\/www.theukrules.co.uk\/rules\/legal\/death\/business-relief-for-inheritance-tax\/\">Continue reading <span class=\"screen-reader-text\">Business Property Relief for Inheritance Tax Purposes in UK<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":1313,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Business Property Relief for Inheritance Tax Purposes in UK - UK Rules<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.theukrules.co.uk\/rules\/legal\/death\/business-relief-for-inheritance-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Business Property Relief for Inheritance Tax Purposes in UK - UK Rules\" \/>\n<meta property=\"og:description\" content=\"BUSINESS RELIEF: Getting it can reduce the value of a business or its assets. 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