Inheritance Tax Reliefs

Tax Question

Regarding Inheritance Tax reliefs, my client died and, at the time of death he had held shares in a limited company for 3 years. For 2.5 of those years the company was dormant, not undertaking any business whatsoever. I am looking at the rules for Business Property Relief and I see that the shares were held for at least the minimum period (2 years) but I am concerned that the company did not trade throughout that period.

Tax Answer

This raises an interesting point. As you state the asset was held for the requisite period, however, there is one further consideration. This requires that the company must have been in business for the two year period to death.

Strangely, it is not necessary that the business would, when considered alone, be a qualifying trade for Business Property Relief (BPR) for the two years. The qualifying business purpose must be in place at the time of transfer (in our case, death) and, provided there was some business throughout the 2 years to death, then the relief will be available.

For example, the company could have been running a property investment letting business for 18 months and then start trading for the final 6 months. In these circumstances, BPR would be due.

In our case, however, as the company was dormant during the period, there would be no business activity for the full two years and so the shares would not qualify for BPR. This view is supported by HMRC at IHTM25303.

Related Tax Questions

How Group Relief Works

How does group relief work?

View Answer

IHT Joint Accounts

If my grandmother adds my aunt to her joint savings account, can this reduce her inheritance tax estate by 50% of the savings account value?

View Answer

Associated Companies

I have several clients that have several companies. Can you outline the rules around associated companies and the impact of the rate of corporation tax?

View Answer

Homeworking Expense Relief Changes Post-April 2026

What are the new rules regarding relief for homeworking? In particular, what about the rules for directors who do not have any business premises?

View Answer

CGT Mixed Use Property

I have sold a mixed-use property. Is this taxed as the sale of a commercial or residential property for capital gains tax purposes?

View Answer

MTD Self-employed

My client had turnover from self – employment of £55,000 in the 2024/25 tax year which means he has to enter Making Tax Digital (MTD) from 6 April 2026. The turnover will be much less in

View Answer

Vantage Fee Protect Customer Testimonials

Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.

Linda Giles Chartered Accountant

Real people, real results

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

Truly professional staff, especially the account manager who handled my account. Thoroughly recommended.
Craig Hanlon, Beancounter Accountancy Services
Vantage have been the first choice for fee protection for our practice for many years. They offer peace of mind, expert advice and their service is second to none.
Nikola Greening, Chepstow Accounting
I would like to compliment Yasine on his great service and professionalism in handling my company's needs and dealing with all queries surrounding the mailing. Also responding very quickly to emails.
Dave Howe, BAS Bristol
I have used Vantage for over 10 years and never contemplated moving to another provider which I think says it all. Very friendly/competitive in pricing and professional.
Ronald Brotherton, Brothertons Accountants Limited
Always top service and on-hand to deal with any queries. Definitely recommended!
David Wall, A J Bennewith & Co
Having switched to VTFP, we were immediately really impressed with the advice line service, the advisors are brilliant, no waiting times, you nearly always get an advisor on the first time of calling.
Diana Miller, Robinson Miller
We’ve been using your VAT and Tax specialists lately – they’re a godsend – really knowledgeable, straight talking, patient and professional We’re so happy with Vantage.
Debby Wetton, Sealy Shaw
I have had a pleasant experience dealing with you during the renewal process and have found you very helpful.
Amy Smith, RRL LLP
The Team at Vantage are always a delight and made the switch seamless, we have got so much more out of our Fee Protection scheme since switching to Vantage.
Francesca Tricarico, Future Cloud Accounting
The service has been seamless from start to finish – with clear communication, efficient support, and a real understanding of our needs.
Haroon Sarwar, HMS Accountancy
We use Vantage for our tax fee protection policy which is good value. The tax and VAT helplines are really helpful, manned by real people who answer the calls in good time.
Jennie Gillam, Red Fish Accountancy Ltd

Don’t be shy,
get in touch

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
Privacy Policy Consent*