IHT - Reliefs - Lifetime and Death Flashcards
(20 cards)
What is the purpose of Business Property Relief (BPR)?
To reduce the IHT value of qualifying business property at either death or on a lifetime transfer.
What percentage of BPR is typically available for qualifying business property?
100% or 50%, depending on the asset type.
What assets qualify for 100% BPR?
- Unquoted shares in a private limited company
- Interest in a business (e.g. sole trader or partnership)
What assets qualify for 50% BPR?
- Quoted shares where the transferor has control (i.e. 50%+ holding)
- Assets owned personally but used in a qualifying business by a company controlled by the transferor or their partnership
What types of business do not qualify for BPR?
A business wholly or mainly dealing in:
- Land or buildings
- Securities or shares
- Investments, e.g. buy-to-let portfolios
What is the minimum ownership period for BPR to apply?
The transferor must have owned the assets for at least 2 years before the transfer.
Does the 2-year ownership requirement pass to a surviving spouse?
Yes—the surviving spouse inherits the ownership period of their deceased spouse.
What condition must be met for BPR to apply to a PET or LCT assessed on death?
The transferee must still own the qualifying business property when the transferor dies.
Is there a minimum ownership period required for the transferee to claim BPR?
No—the transferee does not need to own the property for 2 years.
What is the purpose of Agricultural Property Relief (APR)?
To reduce the IHT value of qualifying agricultural property (up to 100%).
What qualifies as agricultural property for APR purposes?
- Agricultural land and buildings
- Farmhouses or cottages used for agriculture and of character appropriate to the land
What are the ownership/occupation requirements for APR?
- 2 years of occupation by the transferor
- Or 7 years of ownership and agricultural use (by anyone)
What percentage of APR is normally available?
100% if the land is owner-occupied or let after 1 Sep 1995
50% if let before that date
When does APR apply to PETs or LCTs assessed on death?
If the transferee still owns the qualifying agricultural assets at the transferor’s death.
Does the transferee need to have held the property for 2 years?
No—the 2-year ownership rule only applies to the transferor, not the transferee.
Can BPR or APR apply to inherited business/agricultural property?
Yes—ownership is deemed from the date of death of the person from whom the asset was inherited.
What happens if the transferor replaces a qualifying asset with another before death?
The replacement period is aggregated with the earlier ownership for qualification purposes.
If an asset qualifies for both APR and BPR, which applies?
APR applies in priority—you cannot apply both to the same asset.
Give an example of an asset likely to qualify for APR but not BPR.
A farmhouse or agricultural cottage used for farming by a worker.
Give an example of an asset likely to qualify for BPR but not APR.
Livestock or farming machinery—not treated as agricultural land/buildings.
