Please read the below content in continuation with our last week newsletter.

The ‘wrong’ type of business;

BPR cannot be claimed If the relevant business property is in the company which:

  • Mainly deals with securities, stocks, shares, land or buildings, or in making or holding investments;
  • Is a not-for-profit organisation;
  • Is being sold, unless the sale is to a company that will carry on the business and the estate will mainly be paid in shares in that company; or
  • Is being wound up unless this is part of a process to allow the business of the company to continue.

BPR is also unavailable on an asset that also qualifies for agricultural property relief, or where the asset was not used mainly in the business in the two years prior to the transfer or if the asset is not needed for future use in the business.

However, if part of a non-qualifying asset is used in a business, BPR may be available in respect of that part. This would be the case, for example, where a property comprises a shop, plus rooms above occupied as the proprietor’s home. The rooms used for the shop may qualify for BPR, but the rooms used as a home will not.

BPR may also be available on the transfer of agricultural property, such as farmland, farm buildings or equipment, which is not eligible for agricultural property relief.

Replacement assets

Replacement business assets may also qualify for the relief, if certain conditions are satisfied.

Broadly, the new assets must replace property which, together with the property they replaced, were owned by the transferor in total for at least two years in the five years preceding the transfer; and had the transfer occurred immediately before the replacement, if the property which was replaced would have been relevant business property.

Part – 3 follows…