IHT Business Relief Flashcards
How long must you hold BR asset to get IHT relief?
2 years prior to death
When are ISAs not subject to IHT?
If invested in AIM shares
What is the purpose of Business Relief?
Relief is given to ensure that following death of business owner, a family owned business can survive as a trading entity without being sold to pay IHT.
But it’s also available to private investors
What are benefits of private investors investing in shares the qualify for BR?
The investment are outside their estate after 2 years rather than 7
The investor retains access to the investment and any dividends
What BR investments get 100% relief?
EIS
Shares in unquoted company not listed on LSE including AIM
A trading business/interest in a trading business including sole traders and partnerships
What BR investments do you get 50% relief?
A controlling holding of shares in a quoted company - ie more than 50% voting rights
Land, buildings, machinery or plant used for the purposes of the business carried out by the business
What happens to relief when a widow inherits BR?
Ownership period is deemed to commence when the deceased spouse acquired the asset.
What happens to the relief of a BR asset when it is sold?
The relief can be maintained if asset is replaced by the purchase of a new business asset.
Two year ownership is not reset if the sale proceeds are used to purchase a replacement asset within three years of the sale of the original asset
Although no IHT payable on qualifying BR is the value included in the net estate?
Yes
This can affect eligibility for RNRB
What happens to BR relief if
the BR asset is transferred to a spouse during lifetime?
Spouse will not qualify for relief until they have personally owned the asset for two years
Where the estate is split between spouse and children BR assets are best left to who?
Children
As spousal transfer is exempt so could be more efficient to leave spouse non business assets with BR assets going to children
