Shares and Assets Valuation Manual

SVM111040 - IHT Business Property Relief: Categories of business property and rates of relief

For business relief (BR) to be due on assets, the property must fall within one of the following categories listed in section 105(1) IHTA 1984.

Property within section 105(1)(bb) IHTA 1984

Section 105(1)(bb) IHTA 1984 gives relief to:

On or after 6 April 1996 to 5 April 2026 "any unquoted shares in a company". Relief is at 100%.

From 6 April 2026, relief at 100% is available on the combined value of qualifying agricultural and/or business property up to £2.5 million. This value will include any gifts of qualifying property made on or after 30 October 2024 and within 7 years of the death and other property (including trust property) that is treated as part of the estate. Where the total value of qualifying property exceeds £2.5 million, the excess will qualify for relief at 50%.

Unused £2.5m allowance from a late spouse or civil partner may be transferred to a deceased’s estate, provided that a claim is made within the permitted period – 4 years after the end of the month of the survivor’s death or, where it ends later, within 6 months of the personal representatives starting their role.

 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.

Property within section 105(1)(b) IHTA 1984

Section 105(1)(b) IHTA 1984 gives relief to:

On or after 6 April 1996 to 5 April 2026 "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 their 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 relief, if due, will be at 100% subject to the above requirements quoted from 6 April 2026.

From 6 April 2026, certain categories of unquoted shares and securities no longer qualify for relief at 100%; relief is available at 50% only under IHTA84/S104.

FA26/Sch12/Para 12 amends the definition of relevant business property in IHTA84/S105(1) by inserting new categories of unquoted shares and securities. These categories are treated differently from other unquoted holdings and are subject to a reduced rate of relief.

Categories qualifying only for 50% relief

The categories affected are:

IHTA84/S105(1)(aa)
Any unquoted shares that are traded on a recognised stock exchange.

IHTA84/S105(1)(ab)
Any unquoted securities that are traded on a recognised stock exchange which, together with any other unquoted shares or securities, give the transferor control of the company.

IHTA84/S105(1)(ac)
Any unquoted shares that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange.

IHTA84/S105(1)(ad)
Any unquoted securities that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange which, together with any other unquoted shares or securities, give the transferor control of the company.

Although shares and securities within these categories remain relevant business property, they no longer qualify for relief at 100%. Relief is restricted to 50%, and such property is not relevant to the 100% relief allowance.

Unquoted shares and securities that do not fall within these new categories (e.g. because they are not traded on a recognised stock exchange) may still qualify as relevant business property under IHTA84/S105(1)(b) (unquoted shares) or (bb) (unquoted securities which are part of a control holding). Where applicable, those holdings can qualify for relief at 100%, subject to the availability of the 100% relief allowance (see IHTM25171 and IHTM25191).

References to a “recognised stock exchange” are defined in IHTA84/S272 by reference to ITA07/S1005. See IHTM18131.

This page outlines the changes in the rate of relief. The ownership conditions (see IHTM25301) must also be satisfied for relief to be available.

 

Transitional provisions

Special transitional provisions apply in some cases involving these shares. 

Where shares fall within IHTA84/S105(1)(aa) and a potentially exempt transfer or chargeable transfer of such shares is made between 30 October 2024 and 5 April 2026, and the transferor dies within 7 years of the transfer on or after 6 April 2026, relief is restricted to 50% when the tax charge on death is calculated.

From 6 April 2026, securities within IHTA84/S105(1)(ab) which are part of a control holding get relief at 50%.  Where a potentially exempt transfer or chargeable transfer of such securities is made between 30 October 2024 and 5 April 2026 (whether or not that holding gave the transferor control) and the transferor dies within 7 years of the transfer on or after 6 April 2026, relief is restricted to 50% when the tax charge on death is calculated.  

Shares within IHTA84/S105(1)(ac) and (ad) are not subject to any transitional provisions, so that if the transfer was before 6 April 2026, 100% relief is available.

Property within section 105(1)(cc) IHTA 1984

After 10 March 1992 section 105(1)(cc) IHTA 1984 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". Section 105(1)(cc) IHTA 1984 provides for relief at 50%. This category will be met very rarely.

Property within section 105(1)(d) IHTA 1984

Section 105(1)(d) IHTA 1984 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 .."

Section 105(6) IHTA 1984 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.” Therefore, 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