Losing a loved one is a difficult and emotional time, and dealing with the financial aftermath can feel overwhelming, especially when it comes to managing Inheritance Tax (IHT).

If you’ve inherited a business, you’ll need to be aware of how it affects the estate’s value and the potential tax implications.

While inheriting a business can offer new opportunities, it also adds difficulty to the estate’s IHT liability.

The value of the business is included in the overall estate, meaning it could push the estate above the IHT threshold, triggering a tax bill.

However, there are valuable reliefs designed to mitigate the impact of IHT on business assets.

Business Relief (BR) (Formerly known as Business Property Relief)

One of the most beneficial reliefs for those inheriting a business is Business Property Relief (BR).

BR was introduced to help family-owned and small businesses continue operating after a death without the heavy burden of IHT.

If the conditions are met, then this relief can reduce or even eliminate the tax due on qualifying business assets.

These might include:

• Sole trader businesses or a partnership shares
• Shares in a privately held (unlisted) trading company (including AIM listed shares)
• Land, buildings, or machinery owned personally and used by a partnership or a company you control

Depending on the type of asset, BR can offer either 50 per cent or 100 per cent relief.

Importantly, this relief applies not only at the point of inheritance but also during the owner’s lifetime, offering vital protection for businesses gifted down through generations.

Agricultural Property Relief (APR)

If the business you’ve inherited is involved in farming or agriculture, Agricultural Property Relief (APR) might provide support.

APR offers 50 per cent or 100 per cent relief on the agricultural value of agricultural land, farm buildings, and farmhouses, provided they meet certain conditions.

APR is essential for ensuring that agricultural businesses can remain operational after the owner’s death, easing the financial burden on the heirs. This relief is also available for lifetime gifts.

Seeking professional guidance

The last thing you want during such a difficult time is to be weighed down by financial worries or concerns about tax obligations.

This is where we can help.

As tax experts and licensed probate service providers, we specialise in helping executors manage estate administration efficiently.

If we have already acted as accountants and tax advisers for the person who has passed away, we’ll have much of the required financial information readily available.

This allows us to expedite the probate process and reduce the burden on the executor, ensuring that matters are dealt with as quickly and smoothly as possible.

Find out more about our probate services here.

If you’ve inherited a business or are managing an estate that includes one, contact us to find out how we can assist you with IHT reliefs and probate, making the process as stress-free as possible.