Business property relief: reform on the horizon?

Key points

• Business property relief is an extremely valuable relief from inheritance tax.
• Businesses which are ‘wholly or mainly’ investment businesses cannot benefit from the relief but this test may be changed so that it is harder for businesses to qualify if they have a mixture of non-investment and investment activities.
• Other possible changes to BPR include capping the value of assets which can benefit and restricting application of the relief for AIM shares.
• If BPR is reformed it could impact how family businesses are structured and how and when assets are passed on to the next generation.

We are expecting a major shake up of the inheritance tax (IHT) system on 30 October with a move from a domicile-based system to a residence-based one. Given the focus of press coverage on this and other changes to the taxation of ‘non-doms’ UK domiciled individuals who are...