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Tuesday, 22 August 2023 15:17

IHT - Business Property Relief

BPR is a valuable relief for IHT purposes on both lifetime and death transfers. The relief is given automatically, before other reliefs and exemptions and any tax payable, after the relief, is likely to qualify for interest-free instalments over 10 years. 


 To be eligible for relief, the property must:

  • Be relevant business property;
  • Have been owned for a minimum period (generally 2 years);
  • Not be subject to a binding contract for sale at the time of transfer;
  • Not be an excepted asset 

The expression “excepted assets” generally means assets that were not used for business purposes throughout the 2 year period immediately preceding the transfer.

The most common example of an excepted asset refers to surplus cash in a business – this can occur as successful businesses accumulate cash reserves that might not have been earmarked for future use for the purposes of the business.

Eligible Property (relevant business property)

The rate of BPR is either 100% or 50% depending upon the type of property. 

Property qualifying for 100% BPR includes: 

  • Unincorporated businesses and partnership interests; 
  • Shares in any unquoted company;
  • Securities of an unquoted company controlled by the transferor. 

Property qualifying for 50% BPR includes: 

  • Shares or securities of a quoted company controlled by the transferor;
  • Land, buildings, machinery or plant owned by the transferor (and used immediately before transfer by a company controlled by the transferor) – or by a partnership in which the transferor was a partner;
  • Similar assets in which the transferor had an interest in possession (an example being an interest in possession Trust granted under a Will) and used for business purposes immediately prior to the transfer wholly or mainly for the purposes of a business carried on by the transferor.

The most common uses of BPR in practice relate to interests in businesses and shares in unquoted family companies. The relief (either 100% or 50%) is deducted from the value of the asset for IHT purposes. 


There are certain business activities that may exclude relief and these are: 

  • Businesses that consist wholly or exclusively of dealing in stocks, shares, securities, land or buildings; 
  • Making or holding investments 

There are certain examples of when the exclusion does not apply and please note that letting property may be difficult to justify for BPR purposes depending upon the facts of each case.

Withdrawal of relief for lifetime transfers

Special rules apply where the transferor dies within 7 years of a transfer eligible for BPR. 

Moreover, to qualify for BPR on death of the transferor, the property subject to the original transfer, must:

  • Be owned by the transferee throughout the period beginning with the date of the transfer and ending with the death of the transferor; 
  • Not, at the time of the transferor's death, be the subject of a binding contact for sale;
  • Still qualify as relevant business property - ignoring the minimum 2 year ownership requirement 


The rules relating to BPR can be complex to administer but the reliefs can be most beneficial in practice. HMRC provides an advance clearance to deal with BPR rulings - this is available to business owners where there is a material uncertainty over the interpretation of the law.  

Ian Conway


This article was written by Ian Conway, who is a Senior Tax Manager based in our Taunton office. Ian is both FCA and CTA qualified and is also certified in Probate and Estate Administration. Ian will be pleased to repond to any questions you may have regarding Inheritance Tax or Probate Issues. Please contact him on 01823 286274 or by email This email address is being protected from spambots. You need JavaScript enabled to view it.


Last modified on Tuesday, 05 September 2023 09:06



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