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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

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  • Business Property Relief Excepted Assets – Background

    Business property relief (BPR) is an attractive relief. None more so than for unquoted shares in trading companies where the headline rate of relief is 100% of the value of the shares.

    For further information on business property relief in general then please see our article on what is business property relief.

    As such, the shares in most family trading companies will qualify for 100% relief in principle.

    However, that is not where the story ends.

    There is a potential trap in the concept of so-called ‘excepted assets’. This excludes any value that relates to this type of asset from garnering relief.

    As such, when working out the IHT position, one needs to leave out any value that relates to excepted assets.

    This leads us to the important question of what exactly are excepted assets?

    Definition – What is an Excepted Asset

    The legislation defines these as assets which are:

    • Not being used wholly / mainly for business purposes throughout the two years before the transfer on death or in lifetime; nor
    • Not required for future use in the business

    Surplus Cash Balance as an Excepted Asset

    One practical problem that is often encountered is the presence of surplus cash.

    Clearly, an active company needs some spare cash. As such, it is possible to argue that any excess cash meets the second of the tests above where it can be demonstrated it is needed for future business purposes.

    We would recommend that any cash holdings in excess of normal requirements should be clearly evidenced in order to repel any HMRC interventions.

    For example, if the Directors are retaining cash for the purposes of expanding the business (e.g. to buy a target business) then this should be documented.

    If you have any queries regarding excepted assets or the availability of business property relief in general then please do not hesitate to get in touch.

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    Business property relief excepted assets was last updated on 12 November 2019

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