Reducing the amount of Inheritance Tax payable on other assets
Depending on how you own the business and what type of business it is, you could receive either 50% or 100% tax relief on it. Business Relief reduces the value of a business or its assets when working out how much Inheritance Tax (IHT) has to be paid.
Any ownership of a business, or share of a business, is included in the estate for IHT purposes.
Business Relief of either 50% or 100% is available on some of an estate’s business assets, which can be passed on while the owner is still alive, or as part of the Will.
As the executor of the Will or administrator of the estate, you can claim Business Relief when you’re valuing the estate. You must use the market value of the business or asset when calculating relief at 50%.
You can claim relief on property and buildings, unlisted shares, and machinery.
A farm can be passed on free from IHT. However, certain farm assets aren’t exempt from tax, such as farm machinery. Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively.
If you leave a woodland property, the land itself is not subject to IHT. However, the trees on the property are subject to the tax if sold or given away as timber. The executor of your estate will have to include the value of the woodland when applying for probate, even though it’s not considered for IHT.
If you own a building, land or objects of national scientific, historic or artistic importance, you could claim relief from IHT. However, there are certain conditions that must be met in order to get this relief.