Regarding tax cuts, the Business Property Relief (BPR) tax is among the best. In addition, you can get Inheritance Tax (IHT) relief for factors like business assets and shares in qualified enterprises. If you own a business or have a financial stake in a business, your estate may qualify for relief or eligible exemption from inheritance tax.

When you pass away, your estate will owe a tax known as inheritance tax, which will be deducted from the funds in your estate. After you die, all of your possessions will be considered part of your estate. Individuals in the United Kingdom have a personal inheritance tax exemption, known as the “nil-rate band,” currently set at £325,000. (NRB). If your estate is worth more than this threshold, you will owe inheritance tax on the excess.

Inheritance tax (IHT) can be passed on certain business assets during your lifetime and after you pass away with the aid of Business Property Relief. However, this tax relief can reduce the value of a business or the assets a business owns, affecting the amount of inheritance tax (IHT) owed.

For your estate to be eligible for BPR, you must have been the only or majority owner of the business or its assets for at least two years immediately preceding your death. As a result, if you pass an asset and then die away afterwards, your estate may be eligible for relief. This rule applies to you unless you and your spouse have owned the asset for at least two years before its transfer. This means that the time your spouse owned the property is added to the time you have held it. It is possible to qualify for BPR relief if you have owned numerous homes for more than two years.

However, not every business or ownership stake in a business qualifies for the Business Property Relief. The following are example instances in which BPR is made available:

• Minority holdings in a private company fulfil the criteria for “qualifying shares.”
• Shares of an eligible company that are listed on the AIM market of the London Stock Exchange
• The business will not qualify for Business Property Relief if its primary operations include trading securities, stocks, land, buildings, or creating or holding investments. This effectively blocks buy-to-let investors from BPR. Buy-to-let real estate operations are considered investment businesses.