Corporate Planning - Business Relief

Preserving and or achieving Business Relief

Background

Agricultural and Business Relief (BR) are a tax concessions applied to an entity where the value of the assets is excluded from the inheritance tax calculation on the value of an individuals’ estate.

As the concession currently stands, to qualify for the relief the investment in the asset must have been held for at least two years and must at all times have been used for agricultural purposes and or predominantly a trading entity.

Where a qualifying business, or entity, has been disposed of, the owner can reinvest in another qualifying asset and preserve the original relief so long as this occurs withing three years of the sale of the original qualifying business.

Opportunities

1. Qualifying assets reduce inheritance tax whilst remaining in the control of the owner
2. Qualifying assets can be gifted into trust without invoking a partial payment of inheritance tax or using up any nil rate band allowance

Threats

1. Investing in small unlisted trading assets or for that matter AIM listed securities is deemed to be a high-risk investment that could lose some or all of your capital.

A thought

Whilst impossible to expunge the deemed high risk nature of these little regulated and unlisted securities, for some sophisticated investors, as a part of their broader portfolios, may like to consider a number of asset back securities that are offered as collective funds that are qualifying for the BR to achieve the potential of inheritance tax relief.