Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
, see all updates

Investment businesses: Exceptions

The rule excluding investment businesses (IHTM25261) from business relief does not apply:

  1. to any property if the business is wholly (not ‘wholly or mainly’) that of market maker or discount house carried on in the United Kingdom. New legislation (SI 2012/2903) extends this to market makers or discount houses who conduct business in any European Economic area (EEA) state from 31 December 2012, or
  2. to shares or securities of a company if its business consists wholly or mainly in being a holding company (IHTM25263) of one or more companies whose business does not fall within IHTA84/S105(3) - this is a matter on which Shares and Assets Valuation (SAV) can advise, IHTA84/S105(4).


‘Market maker’ is defined by IHTA84/S105(7) as a person who:

  1. holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks or shares at a price specified by him, and
  2. is recognised as doing so by the Council of The Stock Exchange’.


HMRC also have power to make regulations providing that IHTA84/S105(7) shall have effect as if the references in it to ‘The Stock Exchange’ and the ‘Council of The Stock Exchange’ were references to any recognised investment exchange within the meaning of the Financial Services Act 1986.

HMRC have exercised that power. The business of market maker or principal trader on LIFFOE can qualify for business relief (because IHTA84/S105(3) is excluded) on transfers of value on or after 23 March 1992. LIFFOE is short for the London International Financial Futures and Options Exchange which was formed on 23 March 1992 by the merger of the London International Financial Futures Exchange (LIFFE) and the London Traded Options Market (LTOM).

We understand that most of such businesses are in the hands of quoted companies or their subsidiaries. So we do not anticipate many transfers of value of such businesses.