What is Business Property Relief?

Business Property Relief (BPR) is a tax relief that exempts heirs from paying IHT when they inherit a business. BPR was introduced to help prevent the dissolution of family companies on the death of the founder in order to raise funds to pay IHT.

BPR has helped families save significant amounts on tax and stopped many family businesses from having to be sold to pay an IHT bill. However, a small number of excessive BPR claims have led HMRC to vigorously investigate those it considers potentially illegitimate.

How can I be sure I claim BPR correctly?

HMRC is increasingly concerned about overclaims of BPR – whether intentional or accidental. It is crucial for families to understand their entitlement to BPR, in order to avoid common pitfalls.

If you inherit a family business, you should be careful not to claim BPR too aggressively. HMRC is mainly targeting heirs claiming BPR on assets that are not truly part of a business, such as substantial amounts of cash held by a business or non-trading companies.

Families inheriting a private business should seek specialist legal and financial advice before claiming any tax reliefs on their inheritance. This can help avoid a costly and emotionally stressful investigation by HMRC.

What is and isn’t excluded from BPR?

Many business assets are excluded from BPR, however, some publicly traded equities still qualify. For example, shares on the Alternative Investment Market remain eligible.

Assets excluded from BPR include:

• Cash reserves held in business bank accounts
• Most stocks and shares listed on main market
• Property owned by a business that is let out
• Property owned by an individual but rented by a business.

Non-trading businesses excluded from BPR include:

• Furnished holiday lets such as Airbnb properties
• Buy-to-let portfolios
• Loan financing businesses
• Property developing and renting businesses, including student accommodation providers
• Businesses holding art as an investment, but not buying and selling the art to make a profit from the sales.

How TWM can help you

At TWM, our dedicated private client solicitors have extensive experience in Business Property Relief and are well-equipped to guide you through its complexities. Our team can advise you on the most effective steps to protect your family business and alleviate the administrative burden during this challenging time.

For further details and advice, please contact our Private Client team today for an initial no-obligation consultation.