Business Property Relief

H and W were in partnership. H dies, his share being subject to a life interest for W, subject to that on discretionary trusts.

BPR would have been available on H’s partnership interest. There was no partnership agreement and so the partnership will have determined on death.

W continues the business after death as a sole trader in the same premises, which were a partnership asset.

Would the combined effect of s106-109 IHTA (replacements and successions/successive transfers) mean that if the trustees appointed out H’s share of the former partnership assets to the children before 2 years after H’s death, 100% BPR would be available,
and CGT holdover relief?

Simon Northcott

Not sure of the answer, but a possible alternative option is to perhaps advance the business assets to the surviving spouse who then redirects into a discretionary trust via a deed of variation. Provided eligible business assets are advanced does this work?

Haroon Rashid
I Will Solicitors Ltd

I do not believe this would work, as the advance is not read back by s144, so it is not a variation of a disposition under the Will for IHT purposes, rather a gift of an asset disposed of by the trust.

Simon Northcott

Whereas if you advance the remainder interest held on discretionary trusts absolutely to some other beneficiary, then they could collectively vary the disposition under the Will?

Haroon Rashid
I Will Solicitors Ltd