Business property relief (BPR) is a relief that reduces the taxable value of property on which inheritance tax is charged. The reduction will be at a rate of 50% or 100%, depending upon the type of business property concerned. This document discusses the conditions required to qualify a property for BPR and property that fail to qualify for BPR. It also covers valuation issues, withdrawal of business property.

Points discussed within this guidance note:

> Business property that qualifies for BPR

In order to qualify for business property relief (BPR) which reduces inheritance tax, the property must meet two conditions regarding length of ownership and fall into a qualifying class. It is this qualifying class which will determine whether 50% or 100% bpr iht is applied. If one of the conditions are not met there are some specific circumstances which can be applied to claim bpr.

> The qualifying classes of business property (relevant business property)

> The two-year ownership rule

> Replacement property

> Valid successive transfers of property

> Business property that cannot qualify for BPR

Some property, despite meeting the conditions for bpr cannot qualify as it is deemed excluded property. This includes businesses which wholly or mainly deal in loan notes or shares, along with two other groups. This note covers the process by which it is decided whether a business is wholly or mainly dealing in excluded trades or whether it qualifies for bpr.

> Excluded business rule

> Companies in liquidation

> Contracts for sale

> Valuation issues

> Valuation of a business or interest in a business

> Valuation of shares and loan notes

> Withdrawal of business property relief


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