Business property relief allows a family business to be passed on to the next generation without any liability to IHT. This makes it a very important tax planning tool.

Relief can be claimed on transfers of value of certain types of business and business assets provided their value is attributable to 'relevant business property'. Relief is available on:

• transfers on death;
• transfers by way of lifetime gifts; or
• chargeable occasions in respect of relevant business property held in trust.

No relief is available for:

• a business not carried on for profit;
• property for which agricultural property relief is available;
• a business consisting wholly or mainly of dealing in securities, stocks or shares, land or buildings, or of making or holding investments;
• a business subject to a binding contract for sale, unless the sale is to a company which will carry on the business and is wholly or mainly in return for shares in or securities of that company (for example where a trader incorporates their business);
• shares in a company which being wound up, or which are subject to a binding contract for sale, unless the sale or winding up are part of an amalgamation, reorganisation or reconstruction.

Relief may be available for a holding of shares in a holding company provided the business of the group is not an excluded business.