What is BPR investment?

Business Property Relief (BPR) is a valuable form of tax relief. It allows you to claim Inheritance Tax (IHT) relief on business assets you own, including shares in qualifying businesses.

What is a business relief investment?

Business Relief (formerly known as Business Property Relief) reduces the value of business property for inheritance tax. It’s available on the transfers of business asset during lifetime or on death. … Investing in shares which qualify for business relief is a popular estate planning option.

What does BPR mainly aim at?

The BPR exists for economic reasons meaning not all companies qualify for the relief. The main aim is to preserve and support smaller companies who mainly operate in the UK. … If you chose to invest in qualifying companies, your investments can be passed on to loved ones IHT free when you pass away.

What is BPR octopus?

Octopus Investments is the largest provider of investments that qualify for Business Property Relief, an established relief from inheritance tax. … We have been managing BPR-qualifying investments since 2005, and now manage more than £3.9 billion across our range of products.

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How does business relief work?

Business Relief reduces the value of a business or its assets when working out how much Inheritance Tax has to be paid. … You can get Business Relief of either 50% or 100% on some of an estate’s business assets, which can be passed on: while the owner is still alive.

What qualifies for BPR relief?

To receive BPR, you must have owned the business or business assets for at least two years before your death. So, if you pass away shortly after acquiring the asset, your estate won’t be eligible for the relief. The exception here is if you inherit the asset from your spouse, who also owned it for less than two years.

Do AIM shares qualify for BPR?

In summary: Many AIM shares qualify for BPR, which provides 100% relief from IHT when passing them on after death (if they have been held for a minimum of two years).

Do you pay IHT on shares?

Shares in a private company are subject to IHT but there is a very valuable relief known as business property relief (BPR). If BPR applies then the shares can be transferred on death or during lifetime free of IHT.

Do property companies qualify for BPR?

A company that carries on trading activities usually qualifies for BPR, whereas a company that undertakes investment activities is usually out of scope. For example, a property development company would be considered to be trading; a property rental company would be considered to be carrying on investment activities.

Do you pay inheritance tax on commercial property?

When you inherit commercial property and decide to take it on as an investment, managing the property and renting it to business tenants, you will have to pay tax on any profit you make. The amount you pay will depend on your circumstances and how much profit you are making.

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What are VCTs and EIS?

Venture capital trusts (VCTs) and enterprise investment schemes (EISs) are often cited as the next port of call after you have used up allowances for pensions and individual savings accounts (Isas).

Do VCT shares qualify for BPR?

This is because when you invest in a VCT, you acquire shares in the VCT itself (listed on the main market of the London Stock Exchange), not in its underlying holdings listed on AIM. Only when you hold shares directly in a company that qualifies for BPR could your investment be IHT free.

Does EIS qualify for BPR?

How it works: after two years, EIS investments qualify for BPR, which means they become exempt from the investor’s estate for IHT purposes. … Investors get 100 per cent BPR on a business or interest in a business and shares in an unlisted company – so EIS investments qualify for this relief.

Does my business qualify for business relief?

HMRC guidance stipulates that a business is trading if at least 50% of its activity is trading activity, and less than 50% is investment activity. The business either qualifies for BR in its entirety, or not at all. In all cases, BR applies only where the deceased has owned the asset for at least two years.

How do I avoid inheritance tax on investment property?

How to avoid inheritance tax

  1. Make a will. …
  2. Make sure you keep below the inheritance tax threshold. …
  3. Give your assets away. …
  4. Put assets into a trust. …
  5. Put assets into a trust and still get the income. …
  6. Take out life insurance. …
  7. Make gifts out of excess income. …
  8. Give away assets that are free from Capital Gains Tax.
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How do you calculate business relief?

The taxable value of the relevant business property is reduced by 90%. You calculate the taxable value by deducting from the market value of the relevant business property: liabilities.