If you are inheriting or receiving a gift of a business property, you may qualify for Business Relief. Business Relief applies to the transfer of a business, shares in a business or the shares or security of a company carrying on a business. In essence, it reduces the taxable value of the business, in respect of Capital Acquisitions Tax, by 90%. It should be noted that if you don’t qualify for Agricultural Relief in respect of agricultural property, you may qualify for Business Relief.
Certain assets can’t be included in the calculation for Business Relief. They include assets which are not being used for the purpose of the business, assets purchased more than two years before the gift or inheritance and not used wholly or mainly for the purpose of the business and any new business bought by the company within the minimum ownership period. The minimum ownership period means that the person making the gift or inheritance must have owned the relevant business for a continuous period of the one of the following:-
- At least two years immediately prior to the date of inheritance in respect of the death of the person giving the inheritance; or
- In the case of a gift five years immediately prior to the date of the gift or inheritance.
If you claim Business Relief, you need to ensure that the business continues to trade for a further six years from the date of the gift or inheritance, or the relief can be fully or partially withdrawn. Furthermore, the business can’t be sold, redeemed or compulsorily acquired within six years of the date of the gift or inheritance or the relief could be withdrawn.
If the relief comprises of development land and is disposed of within ten years of the date of the gift or inheritance, then the relief can also be withdrawn.
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