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.
On this page:
What qualifies for Business Relief?
You can claim Business Relief on:
- a business or an interest in a business
- unlisted shares (shares that aren't listed on a recognised stock exchange), including shares that are traded on the Alternative Investment
- a holding of shares or securities that you own which give you control of a company, that are fully listed on a recognised stock exchange
- any land, buildings, plant or machinery you own, used wholly or mainly in the business during the last two years before the business
was passed on (or since your business acquired them if more recent)
- any land, buildings, plant or machinery used in your business and
held in a trust that you have the right to benefit from
What doesn't qualify for Business Relief?
You can't claim Business Relief if:
- the business or company mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments
- the business is a not-for-profit organisation
- the business is subject to a contract for sale, unless the sale is to a company that will carry on the business and you'll be paid
wholly or mainly in shares of the acquiring business
- the company is being wound up, unless this is part of a process to enable the business of the company to carry on
You can't claim Business Relief on a business asset if the asset:
- also qualifies for Agricultural Relief
- was not used mainly for business in the two years immediately before
you passed it on as a gift during your life, or as part of your will
- is not required for future use in the business
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.
Rates of Business Relief
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:
- shares controlling more than 50 per cent of the voting rights in a listed company
- land, buildings, plant or machinery used in a business that you are a partner in or control at the time of your death
- land, buildings, plant or machinery held in a trust where you have the right to benefit from the trust and use the assets in the trust
in your business
Giving away business property or assets
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
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.
Find out about gifts that are exempt from Inheritance Tax
Read more about Capital Gains Tax
Find out more about Income Tax
a solicitor on the Law Society of England and Wales website (Opens new window)
a solicitor on the Law Society of Northern Ireland website (Opens new window)
Find a solicitor on the Law
Society of Scotland website (Opens new window)
the Probate and Inheritance Tax Helpline
More useful links
Find out more about Business Relief
What to do if you qualify for both Business Relief and Agricultural Relief