Are businesses exempt from inheritance tax?

1 year, 2 months ago by Oliver Atkinson

Currently the standard rate of inheritance tax is 40%. It is payable on your estate, on everything you own including property, businesses,
and shares, over £325,000.

There is no inheritance tax to pay if you leave everything to your husband or wife. This means, for example, if you leave an estate worth £400,000.00 to your grandchildren, they will have to pay £30,000 to the government because the value of your estate is £75,000.00 over the threshold and therefore subject to a 40% inheritance tax.

However, there are ways to reduce this if you have a business by using Business relief for Inheritance Tax.

If you inherit a business or shares in an unlisted company (a company that is not listed ) you can claim 100% relief on the value of those assets and pay no inheritance tax on them.

Similarly, if you inherit property from a business you can claim 50% relief on the value of that property and only pay inheritance tax on the remaining 50% provided the property has been owned for two years and is used for the purpose of business.

There are caveats to this, for example you cannot claim the relief if the business is a not-for-profit or the business deals mostly with stocks, but for many companies this is another good way to minimise taxes and keep your family business trading for future generations.

It is important to note that there there may be different rules depending on the type of business and the business structure so we would urge you speak to Atkinsons for further advice.