SVM111060 | IHT Business Property Relief: Minimum period of ownership - general rule

Section 106 IHTA 1984

The general rule is contained in section 106 IHTA 1984 is that property is not relevant business property, in other words does not qualify for relief, unless it was owned by the transferor throughout the two years immediately preceding the transfer.

The nature of the business carried on by or on the section 105(1) IHTA 1984 business property need not be the same throughout the two-year period. But there must have been a business throughout that period for example, if a company carried on a farming business until one year before a transfer and then changed its activity to providing recreational facilities for families, the shares in it would be relevant business property if the transferor had owned them for the two years before the transfer.

Own and Ownership: general meaning

For the purposes of the general rule in section 106 IHTA 1984 and the supplementary provisions in sections 107 to 109A IHTA 1984, ownership means:

• in the case of settled property in which there is no interest in possession or other settlements which are subject to ten-yearly and exit charges, legal ownership by the trustees

• in all other cases, beneficial entitlement, including entitlement to settled property in which the transferor had a (qualifying) beneficial interest in possession.

Additional Guidance: SVM150000