Business relief is granted on the transfer of relevant business property. The relief applies to the transfer of a business, or a share in a business, or the shares or securities of a company carrying on a business. The relief does not apply to individual assets even if those assets were used in the business.
Where Business Property Relief applies:
- The value of business assets is reduced for a gift/inheritance of relevant business property by 90%, subject to a number of qualifications. The relevant business property must have been owned by the disponer or his/her spouse for at least five years prior to the transfer in the case of a gift (or two years in the case of an inheritance). The asset must remain in the business for at least six years to avoid a clawback of the CAT relief.
- Business property relief also applies to a gift or inheritance of shares in a holding company that holds shares in one or more companies controlled by the beneficiary and his/her relatives, nominees or trustees.
- Business Property relief can result in significant savings however detailed planning needs to carried out to ensure that no clawback of the relief will occur in the future.
- A similar relief for Agricultural land and assets also exists. However, the beneficiary must also satisfy a “Farmer Test” on the date of the gift or inheritance whereby 80% of his or her assets are farming assets.