Introducing Triple Point’s Sustainability Bluebook: 2023 Report
17 October 23
17 October 23
Business Relief is a tax relief with quite a long history. When it was introduced by the UK government in 1976, the intention was to make it easier for family-owned businesses to be passed from one generation to the next, without triggering a large inheritance tax (IHT) bill that could potentially force the beneficiaries to sell the business.
Today, almost 50 years later, Business Relief is viewed as an important IHT relief available not only to family-owned businesses, but also to investors in Business Relief-qualifying companies.
How does Business Relief help with IHT?
Generally speaking, any ownership of a business, or share of a business, will be included in the valuation of a person’s estate for IHT purposes. However, thanks to Business Relief, estates can claim 100% IHT relief on the value of their shares in a qualifying company, provided the deceased owned the business or shares in the business for at least two years before their death.
What types of companies are eligible for Business Relief?
To qualify for Business Relief, companies must satisfy a number of qualifying criteria:
A company won’t qualify for Business Relief if:
How to invest in Business Relief-qualifying companies
One of the simplest ways for someone to take advantage of the IHT relief offered through Business Relief is to choose a dedicated investment manager – such as Triple Point – to set up an investment portfolio on their behalf.
The investment manager will invest their money into companies it expects to be Business Relief-qualifying. Once the investment has been held for at least two years, providing they are still held when the investor dies, the shares can be passed to the investor’s beneficiaries without them facing an IHT bill on the amount invested.
Tax treatment depends on the individual circumstances of each client and is subject to change. Tax relief depends on the companies we invest in maintaining their qualifying status. As with any investment, there is no guarantee that the target return will be achieved and investors may get back less than the amount they invested.