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HMRC internal manual

Partnership Manual

HM Revenue & Customs
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Indirect, capital and transfer taxes and other tax obligations: VAT and partnerships: Inheritance Tax (IHT): Business Property Relief

Business Property Relief (BPR) reduces the value transferred by a transfer of value to the extent that it is attributable to ‘relevant business property’ (IHTA 1984/S104).

BPR is available at 100% on property consisting of a business or an interest in a business, which can include a partner’s share in a partnership business (see IHTM25152). However, no BPR will be allowed where the business consists wholly or mainly of making/holding investments or dealing in securities, stocks/shares or land/buildings.

Where BPR (at 100%) is available on the partnership interest, BPR at 50% is also available on any land and buildings or plant and machinery owned by a partner but used wholly or mainly for the purposes of the partnership’s business.

For the transfer of value to attract BPR, the relevant business property must have been held by the transferor throughout the period of two years immediately preceding the transfer. Where a traditional partnership incorporates itself as an LLP, a partner’s period of ownership for the purposes of qualifying for BPR is not interrupted (further guidance is available at IHTM25094).