Some investments can qualify for UK Business Property Relief
Business property relief investments include investments that qualify for Business Property Relief (BPR) in the United Kingdom. Business Property Relief was introduced by the UK government in 1976, partly to protect actively traded companies from the penalties of inheritance tax upon the death of the founder.
Typically, a privately owned trading company, operating a conventional business model, can qualify as a business property relief investment. A conventional fund or listed security, or a shell company holding static assets, will not qualify as a business property relief investment. A qualifying business property investment that is held for at least two years can provide protection from UK inheritance tax (IHT).
Unquoted companies – those not listed on the main public stock exchanges – can qualify as a business property relief investment.
A typical business property relief investment might include companies involved in specific trading or finance opportunities in sectors of economic or social importance, like renewable energy, leasing, factoring, or even the ownership or management of public houses. Finance companies, providing asset or invoice finance services to small businesses, can also qualify.
A business property relief investment must be held for at least two years to qualify. If the owner dies during this period, his / her spouse or civil partner can still benefit, so long as the business property investment is held for the full term.
Business property relief investments also allow the investor to retain direct ownership unlike, for example, a trust which incurs a legal loss of direct ownership.
The UK government has decided to freeze the inheritance tax (IHT) threshold for Business Property Relief (BPR) at GBP 325,000 (GBP 650,000 for couples) until at least 2021. As UK house prices continue to appreciate, business property relief investments are becoming increasingly attractive.