IHT Tax Reliefs on Lifetime Transfers

Question 1

Business Relief Basics and Requirements

Answer 1

• for lifetime transfers OR on death
• applied BEFORE annual exemption
• given automatically

Requirements
1. must have owned property for 2 years
- unless inherited from spouse; or
- replacement of business assets applies

Question 2

What is the rate of business relief

Answer 2

100% for
- sole trader or partnership interest
- shares in unlisted trading company

50%
- shares in quoted company IF donor had control (over 50% voting shares/ spouses share included)
- land, buildings, plant machinery owned by individual and used by their partnership or company they had control

Question 3

What types of business are excluded from business relief?

Answer 3

Business whose trade is to make or hold investments OR deal with property
- eg. business that invests in property for rental income
- eg business that invests in property for capital gain

Question 4

What property is included for agricultural property?

Answer 4

Agricultural land/buildings being used for agriculture in UK, Channel or EU
- INCLUDING if you are landlord renting it to farmer

Question 4

When is agricultural relief available (transfer vs death) how much is it?

Answer 4

• for lifetime transfer or on death
• applies before annual exemption
• generally 100% relief

Question 5

What are not considered agriculture activities and thus no eligible for agricultural relief?

Answer 5

1. Grazing horses
   - unless stud farm
2. Fishing, Shooting and other sports

Question 6

Ownership requirements for agricultural relief?

Answer 6

Using Land yourself as farmer
- 2 years

Tenanted (rented) land
- 7 years

Question 7

What to consider if some assets don’t come under agricultural relief?

Answer 7

If Farmer (using land themselves) may be able to use business relief for those

Question 8

When does Business/Agricultural Relief take effect?

Answer 8

CLT
- at time of transfer

PET
- on death if still relevant