What is business property and agricultural property relief? Private Wealth
If a gift (whether made during lifetime or on death) is of a special type of asset, relief may apply to reduce the amount of inheritance tax payable, sometimes to nil.
Business property relief
Where the conditions are met, 100 per cent relief is available for unquoted shareholdings and interests in a business (whether owned as a sole trade or in partnership) located anywhere in the world. Fifty per cent relief is available for shares in a quoted company (where you had control of the company) and also for assets, such as land and buildings, used by your partnership or company.
Generally, you must have owned the shares or the business for at least two years prior to the gift (whether made during lifetime or on death).
Certain types of activities and investments are excluded from relief: relief is not available if the business or company’s activities consist mainly in dealing in securities, stocks or shares, land or buildings, or making or holding investments.
Agricultural property relief
Where land in the European Economic Area (including the UK) has been occupied for the purposes of agriculture, the land and any ancillary buildings may benefit from relief at 100 per cent or 50 per cent, depending on who farms the land and how long the land has been owned.
Relief is given on the agricultural value of the land, which is taken to be the value of the property if it were subject to a permanent restriction prohibiting non-agricultural use. This may be lower than the full market value of the property (for example, where there is planning permission to build houses on the land).
However, business property relief may also be available, for example, if you own the land and farm it as a business yourself.