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BPR: The ties that bind

Shared from Tax Insider: BPR: The ties that bind
By Mark McLaughlin, November 2021

Mark McLaughlin highlights a potential pitfall for inheritance tax (IHT) business property relief purposes. 

For individuals who own businesses or an interest in them, business property relief (BPR) is a valuable relief from inheritance tax (IHT). BPR potentially provides relief at 100% (or 50%) on ‘relevant business property’ (e.g., shares in an unquoted company carrying on an eligible activity).  

However, BPR is subject to certain conditions. Failure to satisfy them can result in business owners or shareholders losing out on BPR. 

‘Binding contract’ trap 

An anti-avoidance rule which sometimes goes unnoticed is that BPR is generally denied if there is a ‘binding contract’ for sale of the business property at the time of transfer (IHTA 1984, s 113). 

However, this BPR trap is subject to two statutory

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