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HMRC internal manual

Shares and Assets Valuation Manual

HM Revenue & Customs
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IHT Business Property Relief: Introduction

Sections 103 to 113 Inheritance Tax Act 1984 provide that, if certain conditions are satisfied, there is a percentage reduction (100% in most cases) in the value transferred by a transfer of value in so far as it is attributable to “relevant business property”, as defined in s.105.

“Transfer of value” for this purpose has its extended meaning under s.3(4), 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 his/her 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.


A makes a transfer of value with a value of £50,000 which includes a holding of unquoted shares, worth £25,000 and eligible for 100% Business Relief. Business Relief is given as follows:

Value transferred £50,000
Less Business Relief £25,000
Net value £25,000
Less Annual Exemption available (assuming 2 years available) £6,000
Chargeable transfer £19,000


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

s.114(1) No double relief

AR is discussed in chapter 112 of this manual - SVM112000.

It is possible for the conditions for both BR and AR to be satisfied in regard to the same property. AR takes precedence and, therefore, where the value transferred is reduced by AR, BR cannot also (generally) apply.

For a detailed explanation please see IHT Manual Chapter 25 at IHTM25121.

In many cases BR will provide an alternative relief and accordingly, where this is so, valuers may be able to avoid any detailed consideration of whether land or buildings are occupied for agricultural purposes.

In spite of the theoretical precedence of AR, shares in farming companies will usually satisfy the conditions for both BR and AR, and it may well be simpler to apply BR to the full value of the shares rather than seeking to give AR on part of the value and BR on the rest.


A business property relief flowchart, which sets out the criteria to be satisfied before business relief is available, is to be found at Appendix 2 of this chapter SVM111300.

  Additional Guidance:SVM150000