SVM111010 - IHT Business Property Relief: Introduction

Sections 103 to 113 IHTA 1984 provide that, if certain conditions are satisfied, there is a percentage reduction in the value transferred by a transfer of value in so far as it is attributable to “relevant business property”, as defined in section 105 IHTA 1984.

"Transfer of value" for this purpose has its extended meaning under section 3(4) IHTA 1984, so the reliefs are available on deemed "transfers of value".

For example

  • A transfer on death is a deemed transfer.
  • Where a person has a life interest under a will trust and gives up their interest in favour of subsequent beneficiaries this is also a deemed transfer.

What is reduced

Though the percentage reduction is necessarily related to the value of the shares or other business property, the relief takes the form of a reduction in the value transferred by a transfer of value only and therefore before the application of any exemption available.

With effect for deaths and other transfers from 6 April 2026 (and including transfers made within 7 years of a death on or after 6 April 2026 if they were made on or after 30 October 2024) the highest rate of relief (100%) will be available on the combined value of qualifying agricultural and/or business property up to £2.5 million, or up to £5m if unused allowance can be transferred from a pre-deceased spouse or civil partner. This will only be due on the chargeable value of relievable property and will not apply to exempt transfers of relievable property. Any value in respect of total relievable property which exceeds the allowance will qualify for relief at 50%. See IHTM25500.

Additionally, shares in companies listed on a market that does not meet the definition of ‘listed’ for HM Revenue and Customs (HMRC) purposes (such as Alternative Investment Market (AIM)) and shares that are traded on a foreign stock exchange that is not a recognised stock exchange, can now only qualify for 50% relief.

Relationship between Business Relief (BR) and Agricultural Relief (AR)

It is possible for the conditions for both business relief and agricultural relief to be satisfied in regard to the same property. To prevent double relief, the legislation provides that any part of the value transferred which is reduced by agricultural relief (at whatever rate), (or would be so reduced but for IHTA84/S121 (3)), cannot be reduced by business relief, IHTA84/S114 (1).

See SVM112000 and IHTM25121.

Additional Guidance: SVM150000