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HMRC internal manual

Shares and Assets Valuation Manual

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HM Revenue & Customs
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IHT Business Property Relief: Categories of business property and rates of relief

For relief to be due on assets which SAV has been asked to consider, the property must fall within one of the following categories listed in s.105(1).

Property within s.105(1)(bb)

On or after 6.4.96 s.105(1)(bb) gives relief to:-

“any unquoted shares in a company”. Relief is at 100%.

Property within s.105(1)(b)

For events on or after 6.4.96 s.105(1)(b) gives relief to:-

“securities of a company which are unquoted and which (either by themselves or together with other such securities owned by the transferor and any unquoted shares so owned) gave the transferor control of the company immediately before the transfer.”

‘Securities’ may be treated as including any debt which is either charged on property or is evidenced by a document under seal. Debts such as debentures and loan notes, even if described as ‘unsecured’, may therefore rank as ‘securities’. Securities only qualify for BR if they gave the transferor control or contributed to his control of the company immediately before the transfer. Since the condition would involve ownership of the security giving the transferor votes at general meetings, almost invariably securities will not qualify for BR. Any case, in which it is claimed that ‘securities’ gave or contributed to control, should be referred to the Appeals Team. In addition, if it appears that a debt ranking as a ‘security’ has been deliberately given votes so as to procure control relief, the case should be referred to the Appeals Team. Any relief, if due, will be at 100%.

Property within s.105(1)(cc)

After 10.3.92 s.105(1)(cc) gives relief to:-

“shares in or securities of a company which are listed and which (either by themselves or together with other such shares or securities owned by the transferor) gave the transferor control of the company immediately before the transfer”. S.105(1)(cc) provides for relief at the lowest rate available at any date, now 50%. This category will be met very rarely.

Property within s.105(1)(d)

S.105(1)(d) applies to “any land or building, machinery or plant which, immediately before the transfer, was used wholly or mainly for the purposes of a business carried on by a company of which the transferor then had control ..”

S.105(6) provides that “land, a building, machinery or plant owned by the transferor and used wholly or mainly for the purposes of a business carried on as mentioned in subsection (1)(d) or (e) above is not relevant business property in relation to a transfer of value, unless the business or the transferor’s interest in it is, or shares or securities of the company carrying on the business immediately before the transfer are, relevant business property in relation to the transfer.” Thus the ownership conditions (see this chapter at SVM111060 onwards) and all other criteria for business relief must be satisfied in respect of the shares or securities giving control.

  Additional Guidance: SVM150000