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HMRC internal manual

Shares and Assets Valuation Manual

IHT Business Property Relief - Changes in the rates of relief

Rates of Business Relief

Business relief was introduced for transfers on or after 7 April 1976 but the rates of relief for the various categories of relevant business property have been increased over the years. The rates of relief applicable at varying dates from 7 April 1976 are shown at Appendix 1 of this chapter at SVM111290. For occasions of charge on or after 6 April 1996, the rate of BR is 100% for transfers in respect of unquoted shares, subject to the conditions for relief being satisfied.

For Inheritance Tax purposes the rates of relief apply to transfers on death on or after the dates shown and also to PETs which become chargeable as a result of a death after the relevant date.


X makes a PET out of his unquoted 10% shareholding in 1991 and dies in 1997, still holding the balance of his shareholding. Assuming all the other conditions for relief are satisfied, the shares held at death qualify for 100% relief under s105(1)(bb) IHTA 1984 as amended by the Finance Act 1996. The shares transferred by the PET, even though made at a time when small minority holdings qualified for only 30% relief, qualify for 100% relief as a result of the death after 5 April 1996.

If a transfer of value is chargeable when made for example a gift into a discretionary trust, any lifetime tax chargeable will be calculated on the basis of the rate of business relief available at the date of transfer - and, for cumulation purposes with later gifts, this is also the appropriate rate. However, any additional tax payable by reason of the transferor’s death within 7 years will be calculated on the basis of the rate of business relief applicable at the date of death.


Y transfers his entire 20% holding in an unquoted company to the trustees of a discretionary trust in 1995. Lifetime tax is calculated on the basis that the shares qualify for 50% relief (the rate applicable to small minority holdings in 1995). On Y’s death in 1997, no additional tax is payable on the transfer because the shares now qualify for BR at 100% as a result of the Finance Act 1996.

  Additional Guidance:SVM150000