What Qualifies for Business Relief For Inheritance Tax?

If you’re a business owner, you should ensure your estate pays minimal inheritance tax on the value of your firm when you pass away. This is why Prestige Tax and Trust Services has decided to ask; what qualifies for business relief for inheritance tax?

Business relief for inheritance tax

You can lower your estate’s inheritance tax bill by claiming business relief for inheritance tax. This allows you to deduct 100% or 50% of the value of your company, or some of its assets, from your estate. Therefore, you need to know what qualifies for business relief for inheritance tax, and at which rate.
You can claim 100% relief on a business, interest in a business, or shares in an unlisted company. You can claim 50% relief on shares that control over 50% of the voting rights in a listed company, and on property (land, buildings or machinery) used by a company you owned or controlled. The 50% rate applies to property used by your company that’s been held in a trust it has the right to benefit from.

What doesn’t qualify?

However, you can’t claim business relief for inheritance tax for the value of your company in some circumstances. Therefore, your firm can’t claim relief if:

  • It’s a not-for-profit organisation.
  • It’s being wound up, unless this is part of a process to allow the business of the company to continue.
  • It’s being sold; unless it’s being sold to a company that will carry on the business, and the estate will be paid mainly in shares.
  • It’s mainly involved in share or stocks, securities, land or buildings, or in making/holding investments.
  • This also applies to some of your company’s assets. You can’t claim business relief for an asset if it isn’t needed by the company for future use, also qualifies for agricultural relief, or wasn’t used primarily for business purposes in the two years before it was either passed on as a gift or as part of the will.

    Prestige Tax and Trust Services

    If you wish to benefit from business relief for inheritance tax, you need to learn how to leave a business in a will. This can be a complex task, which is why you should let Prestige Tax and Trust Services help. Our business protection service will ensure that you can write a will that will safeguard the value of your firm when you pass away.

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