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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Investment businesses: Introduction

Business relief is not due where the business, or the business carried on by the company, consists wholly or mainly (IHTM25265) of

  • dealing in securities, stocks and shares;
  • dealing in land or buildings, or
  • making or holding of investments.

These types of businesses are not relevant business property (IHTM25141) and so do not attract relief, IHTA84/S105(3). The question of whether a business is mainly one of making or holding investments is likely to be the main area of concern.

This restriction applies directly to business interests (IHTM25152) and shareholdings. It also restricts the availability of relief on land and buildings, machinery and plant (IHTM25222) and settled property used in the life tenant’s business (IHTM25242). This is because of the requirement that the business (or the transferor’s interest in it) is, or the shares or securities of the company carrying on the business are, relevant business property, IHTA84/S105(6).

However the restriction in IHTA84/S105(3) does not apply to certain types of businesses.  Broadly these are market makers (IHTM25262) and certain types of holding companies ([IHTM25263](

HMRC also have power (FA1986/S106(5))  to make regulations amending IHTA84/S105 to provide that subsection (3) does not apply to any property if the business concerned is of such a description as is set out in the regulations.  As yet no regulations have been made.