Sections 103 to 113 Inheritance Tax Act 1984 provide that, if
certain conditions are satisfied, there is a percentage reduction
(100% in most cases) in the value transferred by a transfer of
value in so far as it is attributable to “relevant business
property”, as defined in s.105.
"Transfer of value" for this purpose has its extended
meaning under s.3(4), so the reliefs are available on deemed
"transfers of value".
For example
Though the percentage reduction is necessarily related to the
value of the shares or other business property, the relief takes
the form of a reduction in the value transferred by a transfer of
value only and therefore before the application of any exemption
available.
Example
| A makes a transfer of value with a value of £50,000 which includes a holding of unquoted shares, worth £25,000 and eligible for 100% Business Relief. Business Relief is given as follows: | |
| Value transferred | £50,000 |
| Less Business Relief | £25,000 |
| Net value | £25,000 |
| Less Annual Exemption available (assuming 2 years available) | £6,000 |
| Chargeable transfer | £19,000 |
s.114(1)
No double relief
AR is discussed in chapter 112 of this manual -
SVM112000.
It is possible for the conditions for both BR and AR to be
satisfied in regard to the same property. AR takes precedence and,
therefore, where the value transferred is reduced by AR, BR cannot
also (generally) apply.
For a detailed explanation please see IHT Manual Chapter 25
at IHTM25121.
In many cases BR will provide an alternative relief and
accordingly, where this is so, valuers may be able to avoid any
detailed consideration of whether land or buildings are occupied
for agricultural purposes.
In spite of the theoretical precedence of AR, shares in
farming companies will usually satisfy the conditions for both BR
and AR, and it may well be simpler to apply BR to the full value of
the shares rather than seeking to give AR on part of the value and
BR on the rest.
Any case involving the availability of AR where BR may also
be available on the same property should be referred to the Appeals
Team.
A business property relief flowchart, which sets out the criteria to be satisfied before business relief is available, is to be found at Appendix 2 of this chapter SVM111300.
| Additional Guidance: SVM150000 |
