Business Relief (BR) has been an established piece of inheritance tax legislation since 1976.
Once qualifying assets have been owned for at least two years, they can be passed on free from inheritance tax on the death of the owner.
Assets that qualify for Business Relief include agricultural land, forestry, trading businesses and certain qualifying companies quoted on AIM.
Inheritance tax planning using Business Relief enables assets to obtain relief faster than trusts or gifts and, perhaps most importantly, is done in the client’s name so there is no loss of control over the capital.
Business Relief as part of an Estate Planning Strategy
Investing in qualifying companies or assets can be beneficial if:
You don’t want to give away large sums of money
You can give your money away during your lifetime to reduce the value of your estate, but it’s not an option with which many people feel comfortable. However, with a Business Relief qualifying investment, you keep hold of your wealth as the shares are held in your name.
You want to give the inheritance you plan to leave behind the chance to grow
Investing in qualifying companies means your investment has the potential to increase in value. As with any investment, there is risk and you could lose some or all of your money.
You want the money you invest to become free from inheritance tax quickly
Some people are put off by traditional estate planning strategies, such as making gifts or putting money in trust, as these typically take seven years before becoming fully exempt from inheritance tax. A Business Relief qualifying investment enables the shares to obtain 100% exemption after a holding period of just two years. The shares need to be held at the time of death.