Inheritance tax and business property relief

Tax on an estate, and the relief that can apply to a trading business.

What it means

Inheritance tax is charged on an estate above the nil rate band. Business Property Relief can reduce the value of qualifying business assets for IHT purposes.

Why it matters

For an owner whose main asset is the business, BPR is the difference between the family keeping it and having to sell it to pay the tax.

What it looks like in practice

Relief generally requires a trading business rather than an investment one, and a minimum ownership period. Excess cash and investment assets held in the company can dilute it.\n\nThe rules on BPR have been the subject of announced reform — check the current position.

What to watch out for

Building up large cash balances in a trading company. It can jeopardise the relief, and it is a common and well-intentioned mistake.

Where to get proper advice

GOV.UK for the current rates and thresholds, which move most years. Your accountant before acting — this is exactly the kind of question a fee is for.