what qualifies for business property relief

Estate Planning and Business Property Relief: Food for Financial Thought



Posted on: 21st April 2022

As a business owner, you have no doubt heard many colleagues and friends talk about the potential of business property relief northwest– known as BPR from this point onwards. What qualifies for business property relief?

A lot of talks can be misleading or misrepresented, which is why you probably think that it is not for you and don’t bother to look into it or talk with a qualified body, such as independent financial advisers Manchester.

The bare-bones truth is that BPR can be a very valuable Inheritance Tax relief for you, providing you with up to 100 per cent relief when you die – as long as you have owned the business for at least two years leading up to your passing.

Even if you don’t own your own business, there is a benefit for those who invest in a trading company as a way of Inheritance Tax relief. Let’s take a short trip around how BPR works for a business owner like yourself or someone with a potential Inheritance Tax liability.

Business Owner

BPR has its history born in 1976, introduced as a way to ensure that, after the death of the owner, a family-run business could continue trading without having to resort to sale or breaking up to pay an inheritance tax liability.

If you had a business or interest in a business – whether a sole trader, partnership or limited company – 100% of relief can be claimed on the proviso that it is inherited as a going concern – making it exempt from inheritance tax.

100% relief can be achieved on a business or interest in a business, as well as shares in an unlisted company. You can also achieve 50% relief on land, buildings, plant or equipment that you own that is used or partly used by the business (and held in a trust that it has a right to benefit from), as well as shares controlling more than 50% of the voting rights on a listed company. Again, you must have owned the business or asset for a minimum of two years to be able to claim these reliefs.

Investing in a Business

Governments have recognised that encouraging people towards investing in trading businesses, regardless of whether they run the business themselves, has true value. This is where BPR has grown to the possibility of benefitting even if you are not a business owner yourself.

If you are aware that you have an inheritance tax liability but don’t want to gift away large sums of money if your beneficiaries are too young an age, you don’t want the complication or expense of trusts or have worries over later life care costs and want to retain access to your money when needed – BPR has the potential to make things much easier.

Investing in BPR-qualifying shares means that not only can you pass them on inheritance tax-free following your death (subject to holding them for two years prior), the investment would stay on in your name which means you would be able to access some or all of the capital if needed.

This is a conversation worth having away from the water-cooler and with credited independent financial advisers Cheshire. Contact the team at Haven IFA today to discuss exactly what qualifies for business property relief and what it will mean for you.