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HMRC internal manual

Inheritance Tax Manual

Gifts with reservation of benefit: Interaction with business relief for shares and securities

For shares and securities in a company subject to a GWR charge (IHTM24200), you will need to check whether they qualify for either agricultural relief or business relief, and at what rate.

To qualify for either relief the value transferred when the initial gift was made needed to have qualified for either

  • business relief at any rate, FA86/SCH20/para8 (1)(a), or
  • agricultural relief as part of a control holding, FA86/SCH20/para8 (1)(c).

When considering whether either business relief or agricultural relief will be due on the GWR charge, it is usually more straightforward if you consider whether business relief applies before considering agricultural relief.

  • Where the company farms the land on a commercial basis, it may be fairly clear whether you can allow business relief at 100%. If so you need not consider agricultural relief.
  • Where the company does not farm the business on a commercial basis it is likely to be an investment business and therefore business relief will not be due and you should consider agricultural relief.
  • Where the company farms the land but the shares or securities are not within IHTA84/S105 (1)(b), (bb) or (cc) they will qualify for business relief but only at 50%. There is then a slight possibility, which you should consider, that agricultural relief may be available at 100%

You should refer unquoted shares and securities to SAV for guidance, providing full details of what you want them to consider.