Using Business Property Relief (FT Advisor)

by Jenny Lowe

Business property relief can help mitigate inheritance tax after two years.


The government’s decision to freeze the inheritance tax (IHT) threshold at £325,000 for individuals and £650,000 for couples until at least 2019, means that thousands more people are being caught by the death tax.

Nigel Ashfield, managing director at Time Investments, says: “The decision to freeze the IHT allowance at £325,000 will mean that with inflation and rising house prices in many parts of the country, thousands more people will end up being liable to pay inheritance tax than ever before.

“What was once seen as a tax for the more wealthy in society is becoming more of a ‘mass market’ tax on people’s wealth. Indeed, when the IHT threshold was frozen in 2009 at £325,000, if the value had been linked to inflation, it would have risen to more than £377,000, an increase of more than £50,000.”

There are, of course, a number of ways in which to mitigate IHT, one of which is Business Property Relief (BPR). Initially introduced by the government in 1976, and having been extended to cover a wider remit of investments since then, BPR allows investors in unquoted shares to qualify for IHT exemption once the assets have been held for two years.

“The most robust interpretation is unquoted shares in a trading company. It was designed originally to stop people having to sell family companies to pay IHT bills, but there are a number of BPR schemes out there that offer people to invest in them and qualify for IHT relief as part of their tax planning,” explains Hugo Rogers, business development director at Puma Investments.


See the full article here on the FT Advisor website.