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Planning opportunities for maximising business property relief
KEY POINTS
- Rate of business property relief.
- Structure of business partnerships.
- Importance of commerciality.
- Discretionary trusts may be useful.
Business property relief (BPR) dates from 1976 and confers generous exemptions from inheritance tax. The objective is presumably to facilitate families to pass on businesses to the next generation but in practice there are potential disadvantages:
- Families may hang on to businesses rather than take the correct commercial decision to sell or restructure.
- Certain assets such as AIM shares may become overpriced due to BPR.
- In a similar vein individuals may invest inappropriately merely to obtain the relief particularly if they are elderly with the prospect of an inheritance tax charge looming.
Business property relief costs the Exchequer £365m...
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