IHTM25351 - Excepted assets:
Introduction
Business relief gives a substantial relief from tax. The
function of IHTA84/S112 is to prevent taxpayers from getting the
benefit of business relief for private assets by confining the
relief to assets needed for the business. IHTA84/S112 provides two
sets of rules for achieving this.
- one set of rules (
IHTM25223) in IHTA84/S112 (3) which
apply to land and buildings, machinery and plant (
IHTM25222)
- another set of rules in IHTA84/S112 (1) which apply to all
other categories of relevant business property: (
IHTM25141)
Under IHTA84/S112 (1) the value of any “excepted
assets” is to be left out of account for the purposes of
business relief. In order not to be "excepted" an asset must pass
one of two tests:
- It must have been used wholly or mainly
for the purposes of the business in question throughout the two
years, or such lesser period as the transferor owned the asset (or
a corresponding interest in the asset in the case of an interest in
a business), immediately preceding the transfer of value,
IHTA84/S112 (2) (a) and IHTA84/S112 (5).
- You should note that this test is not
satisfied if the asset was used for the purposes of a previous
business during the period in question.
- Alternatively it must be required at the
time of the transfer of value for future use (
IHTM25352) for the purposes of the
business in question.
