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HMRC internal manual

Inheritance Tax Manual

The ownership test: Introduction

The general rule is that property is not relevant business property (IHTM25141) and so does not qualify for business relief unless it was owned by the transferor (IHTM25302) throughout the two years immediately preceding the transfer, IHTA84/S106.

The general rule is relaxed in three types of situation

  • where the transferor became entitled to the property on the death of another person (IHTM25321)
  • where the property transferred replaced other relievable property (IHTM25311), and
  • where the property transferred had been acquired on an earlier transfer (IHTM25331) within the two year period.

There are additional ownership requirements for lifetime transfers (IHTM25361) and gifts with reservation (IHTM25381).
If there was a change in the nature of the business during the two-year period – see (IHTM25303).