Business Relief (formerly BPR) can be applied to Business Properties, Unwrapped Investments and ISAs and Agricultural Relief (formerly APR) to Farms.
Apply Business or Agricultural Relief to a Property/Asset
To apply Business Relief or Agricultural Relief to a property/asset, either select an existing asset or go to the + button > Property to enter a new property. In Asset Type select either Business Property or Farm and toggle on the Qualifies for IHT Relief (BPR/APR) setting in the Taxation section.
Enter the Year and the % amount in the Year Qualifying and the Percent Exempt fields.
Business/Farm Assets have to be held for 2 years to qualify for IHT Relief, so if the asset was purchased in 2022, the Year Qualifying would be input as 2024.
If the whole asset qualifies for IHT Relief, input the Percent Exempt as 100%.
If only part of the asset qualifies for IHT Relief e.g. if one room in a building is a shop and the other rooms are a home, the shop part would qualify for Business Relief, but the part with the other rooms would not, input the percentage of the asset which does qualify.
If mortality occurs before 2026 in Voyant, the old rules will be applied and IHT Relief will be 100% of the value of the asset.
If mortality occurs in 2026 or later, IHT Relief on Business Properties and Farms will be 100% of the value of the asset up to the combined Business/Agricultural Relief allowance (£2.5 million) and the remaining value will qualify for 50% relief.
If the Business or Farm is owned/co-owned by the first to die, unused Business/Agricultural Relief allowance will be carried over to the surviving spouse, if applicable.
Example Scenario
Mr and Mrs have a Business Property valued at £6,000,000 on death. This will be eligible for Business Relief.
The Property gets passed to the spouse on first death. Business Relief does not apply as it is covered by the spousal exemption. The unused Business Relief allowance will carry over to the spouse.
On second death the Business Relief is calculated as follows:
Property liquidated at £6,000,000 (Relief of £2,500,000 @ 100% x 2 = £5,000,000)
Asset value of £6,000,000 - £5,000,000 relief = £1,000,000 eligible for 50% relief
£1,000,000 x 50% relief = £500,000
£5,000,000 @ 100% relief = £5,000,000
£1,000,000 @ 50% relief = £500,000
Total BPR/APR relief is £5,500,000
The IHT Relief Percentage shown in the Estate Distribution and Inhertiance Tax section of the Legacy screen is the Total relief (£5,500,000) as a percentage of the Property Value on death (£6,000,000).
£5,500,000/£6,000,000 = 91.67%
Apply Business or Agricultural Relief to an Investment
To apply Business Relief or Agricultural Relief to an investment, either select an existing investment or go to the + button > Investment to enter a new investment. In Type select either Unwrapped Investments or ISA and toggle on the Qualifies for IHT Relief (BPR/APR) setting in the Taxation section.
The date in the Year Qualifying for IHT Exemption box only applies to existing investments. If the investment was purchased in 2022, the Year Qualifying would be input as 2024, due to the 2 year qualifying period.
This field is not relevant to Transfers and New/Regular contributions into an Business Relief investment.
For new investments, IHT relief automatically occurs 2 years after the transfer or contribution into the investment. The ‘Year Qualifying for IHT Exemption’ field will be ignored in this instance and the software will determine the correct year in which IHT relief will apply based on the transfer/contribution dates.
If you are entering multiple transfers/contributions into a new Investment, these would be best entered as separate investments to allow the software to start the 2 year clock after each transfer/contribution.
Please bear in mind that in the software, the clients mortality is assumed to occur at the start of the year, whereas transfers occur at the end of the year.
This means that for an investment set up by a transfer in 2024, IHT relief will apply from the end of 2026 (2 years) i.e. showing on the software at the start of 2027. We would expect to see the Business Relief from 2027 onwards.
If you wanted to check this, you could run the Potential IHT Insight comparing your plans.
Tip: ensure that you complete the Is this an AIM? dropdown correctly as this determines the rate of relief applied for mortality in 2026 onwards.
If mortality occurs before 2026 in Voyant, the old rules will be applied and IHT Relief will be 100% of the value of the investment, regardless of the AIM dropdown.
If mortality occurs in 2026 or later, IHT Relief on non-AIM investments will be 100% of the value of the investment up to the combined Business/Agricultural Relief allowance (£2.5 million) and the remaining value will qualify for 50% relief. For AIM Investments, relief will be 50% of the value of the investment, and does not use the Business Relief allowance.
If the Investment is an AIM Investment, this article will help you set these up; How to add AIM shares - UK.
View Business/Agricultural Relief in the Legacy Overview
The Overview > Legacy screen will show which properties/assets and investments are eligible for Business Relief or Agricultural Relief by including (Subject to IHT Relief) after the asset/investment name in the Valuation Summary.
The amount of relief can be viewed in the Estate Distribution and Inheritance Tax section.
Click on the BPR/APR IHT Relief heading to view the name of the asset/investment, the amount of relief and the blended Percentage relief. Please see the scenario above as to how the percentage is calculated.
The software shows the Inheritance Tax Nil Rate Band as a total which includes the Standard Nil Rate Band, Residence Nil Rate Band (if applicable), any IHT Carryover from deceased spouses and the BPR/APR IHT Relief:
Tip: the BPR/APR IHT Relief shown in the Legacy screen is the total amount of IHT relief the asset/investment receives, including the 50% relief on the amount above the allowance and 50% relief on AIM investments. It does not only show the amount of Business Relief allowance the client is entitled to.
Note: if the plan has more than one asset/investment eligible for IHT relief, the Business/Agricultural Relief allowance will be apportioned between them.