Why Kensington and Chelsea Families Face a Growing IHT Bill — and What to Do About It
Business Property Relief can provide up to 100% relief from Inheritance Tax on qualifying business assets — but the rules are nuanced and the stakes are high.
For business owners, Inheritance Tax (IHT) planning is often one of the most significant financial planning considerations. Business Property Relief (BPR) can be extraordinarily valuable — but it is not automatic and requires careful planning.
What is Business Property Relief?
BPR is a relief that can reduce the value of a business or business assets for IHT purposes by up to 100%. It is available on qualifying business property that has been owned for at least two years before the date of transfer or death.
What qualifies?
Qualifying property includes:
- A sole trader business or interest in a partnership
- Unquoted shares in a trading company
- Shares in a quoted company where the deceased had control
- Land, buildings or machinery used in a qualifying business
Common traps
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Investment activities: BPR is not available for businesses that are mainly investment in nature. The distinction between trading and investment can be difficult — particularly for property businesses.
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Excepted assets: Even where BPR applies to a business, assets not used for business purposes (such as excess cash or investment properties) are excluded.
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Two-year ownership period: Newly acquired assets may not qualify.
Planning opportunities
With careful planning — including reviewing the structure of the business, considering lifetime gifts, and ensuring the business meets the trading test — BPR can form a central part of an effective IHT strategy.
We recommend reviewing your position well in advance of any anticipated transfer event. Get in touch to discuss your situation.
Frequently Asked Questions
How can I reduce my Inheritance Tax liability?+
There are several legitimate strategies including making use of annual gifting allowances, trusts, Business Property Relief (BPR), Agricultural Property Relief (APR), and careful estate planning. Specialist advice from a Chartered Tax Adviser is strongly recommended.
What is Business Property Relief (BPR)?+
Business Property Relief (BPR) is an IHT relief that can reduce the value of a business or its assets when passed on as a gift or as part of an estate. It can provide up to 100% relief in qualifying circumstances.
How does the spousal exemption work for IHT?+
Married couples and civil partners benefit from the unlimited spousal exemption — no IHT is payable on transfers between partners. This is one of the most valuable reliefs available.
Simon Newsham CTA
Chartered Tax Adviser — Founder, Newshams Tax Advisers
Simon Newsham is a Chartered Tax Adviser (CTA) with over 30 years' experience advising businesses, high net worth individuals, law firms and accountancy practices on complex UK tax matters. He has been advising clients since 1995 and is a member of the Chartered Institute of Taxation.
Need Expert Tax Advice?
Arrange a confidential consultation with Simon Newsham CTA. No obligation, no jargon — just clear, practical guidance on your tax matter.
