05: Business and farming assets

Interests in businesses and agricultural property may benefit from some extremely valuable reliefs, although they are subject to several conditions. In particular, you generally need to have held the assets for at least two years before they qualify for these special reliefs. The reliefs reduce the taxable value of the transfer by 100% or 50%.

100% IHT relief is given for:

• Shares in an unlisted trading company, or a trading company listed on AIM (the Alternative Investment Market) or the over the counter market PLUS.
• The business of a sole trader or an interest in a partnership.
• Owner-occupied farms and tenanted farms where the lease started after 31 August 1995.

50% IHT relief is given for:

• Assets owned by an individual and used by a trading company under their control, or by a partnership in which the individual is a partner.
• Tenanted farmland where the lease started before 1 September 1995.

So, even if you are not in business, you could qualify for 100% relief by investing in unlisted companies or AIM shares. But beware, these investments carry higher than average risk.

In his 2009 Budget speech the Chancellor announced that both agricultural property relief and woodlands relief will be extended to property in the European Economic Area (EEA). The change will affect IHT due or paid after 22 April 2003 for agricultural property in an EEA state. The earliest deadline for reclaiming overpayments of IHT will be 21 April 2010.

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