Call Trudy Rogers on 01635 569670 | Email:

Relief to IHT in Wills

The valuable relief of business property relief (BPR) or agricultural property relief (APR) to inheritance tax (IHT) can be lost if you do not plan and organise your assets during your lifetime or if you fail to plan your will correctly.

The relief to IHT for assets that qualify for 'business property relief' is either 50% or 100% of the market value of the assets as at the date of death depending upon the type of asset.  This includes some types of investment portfolios whereby you you receive 100% relief to IHT after only 2 years of ownership of the business interest. However, in order to receive the full value of the relief, the assets must be given away in your Will as a specific gift.  The assets cannot be just swept up as part of the rest of your estate otherwise these assets will only qualify for the 'appropriate fraction' of relief in a calculation set out in the Inheritance Tax Act 1984.  In effect their value is reduced in accordance with the relief BUT in proportion to the value of your residuary estate rather than simply applying 50% relief or 100% relief to the assets.

You can create a Codicil (an amending document) to your Will to deal purely with these assets if you wish, but it would be a good time to review your Will to see what else may need changing or updating. In you Will, these business or agricultural assets can be placed into a Trust or given to individuals, whichever is appropriate for your circumstances.  It is important to consider these assets even if you are married or in a registered civil partnership as the relief should be considered on second death to ease the tax burden of the second estate.

Sample clause:

I give in equal shares to my children Costa Packet and Wanda Packet such items of relevant business property and agricultural property comprised in my free estate (including a divided or undivided share or a part or parcel of any such property) as my Trustees in their absolute discretion shall select being such property that qualifies for relief in accordance with the Inheritance Tax Act 1984 Section 104 or as the case may be Section 116 and if either of my children dies before me leaving a child or children such child or children shall take equally the share their parent would otherwise have inherited.

Please feel free to contact Trudy Rogers at Rogers Legal on 01635 569670 or email if you would like to discuss your Will or Inheritance tax planning.

If you are a farmer or have business interests, there are relief and exemptions available so it is important to keep on top of the constant changes in your work and the tax law to keep you up to date and tax efficient.