IHTM25341 - Assets excluded from
relief: Introduction
The legislation contains anti-abuse provisions which are
designed to prevent business relief applying to what are
essentially non-business assets. Business relief does not apply to
assets which, at the time of the transfer, either were not used in
the business, IHTA84/S110 or had been inadequately or too briefly
used, IHTA84/S112.
IHTA84/S110 and IHTA84/S112 have different functions:
- Under IHTA84/S110 the value of a business or
interest in a business for the purposes of the relief is its net
value, i.e. the value of the assets used in the business less the
liabilities incurred for the purposes of the business – any
assets not used in the business (
IHTM25342) cannot qualify for
relief;
- In broad terms IHTA84/S112 relates only to the
assets used in the business and it makes them excepted assets (
IHTM25351) (i.e. it excludes them from
relief) unless
- they were used wholly or mainly for the
purposes of the business throughout the whole or the last two years
of the relevant period, or
- they are required for future use for those
purposes.
So there is a two-stage process when you consider these
provisions:
- establish the assets used in the business
at the date of the transfer (as part of the process of establishing
the IHTA84/S110 net value), and then
- apply the excepted assets test to the
assets so used.
