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HMRC internal manual

Inheritance Tax Manual

Transfers on death: businesses and interests in businesses

A business or an interest in a business is qualifying property for instalments - IHTA84/S227 (2)(c).

The basic definitions are similar to those for Business Relief (BR) (IHTM25131):

  • the value is the net assets value (compare IHTA84/S110)
  • business includes profession or vocation but does not include a business carried on otherwise than for gain (compare IHTA84/S103 (3)).

Accordingly the instructions on the meaning of business (IHTM25051) elsewhere in the Manual apply.

Interest relief

Property which qualifies for BR under IHTA84/S105 (1)(a) is also qualifying property for interest free (IHTM30363) instalments. (If the BR is at 100%, this is academic.)

In addition, interest free instalments are available under IHTA84/S227 (2)(c) and IHTA84/S234 (1)(a) for

  • any excepted assets (IHTM25351) disallowed for BR under IHTA84/S112
  • businesses excluded from BR because the ownership condition (IHTM25301) is not satisfied or they are investment businesses (IHTM25261)
  • agricultural property (IHTM24030) which is an asset of a qualifying business but is excluded from BR by IHTA84/S114 (1).

These instructions do not apply to holdings of quoted or unquoted shares (IHTM30215) in limited companies.