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If you own a business or a share of a business, this is included in your estate for Inheritance Tax purposes. However, Business Relief may allow you to pass on some of the business free of tax, either during your lifetime or as part of your will.
You can claim Business Relief on:
You can’t claim Business Relief if:
You can’t claim Business Relief on a business asset if the asset:
If part of a non-qualifying asset is used in your business, that part might qualify for Business Relief. For example, if you use one room in a building as a shop and the other rooms are used as your home, the shop will qualify for Business Relief but the rooms won’t.
If the asset qualifies for Business Relief, relief is given at either 50 or 100 per cent, depending on the type of asset.
For the estates of people who died after 6 April 1996, 100 per cent relief is available for a business or interest in a business, or a holding of shares in an unlisted company.
The 50 per cent relief rate is available for:
You can give away business property or assets while you're still alive without putting Business Relief at risk, as long as the property or assets qualify for Business Relief in the first place.
If you give away business property or assets in your lifetime, whoever you give them to must keep them as a going concern until you die in order to keep the relief. They can replace the property or assets - like machinery - with something of the same value if it’s for use in the business.
If you live for seven or more years after making a gift, anything you give away will not be classed as part of your estate for Inheritance Tax purposes. However, there may be Capital Gains Tax or Income Tax implications if you do sell, give away or exchange - 'dispose of' - an asset or property if it's gone up in value during the time that you owned it.
It may be helpful to discuss the implications of giving away business property or assets with a solicitor. You’ll find some links below to professional organisations - though not all professionals are registered with them.
Provided by HM Revenue and Customs