IHT Business Property Relief: Clearance

Can I apply for an HMRC clearance that Business Property Relief will apply? How do I apply?

This is a freeview 'At a glance' guide to HMRC clearance and Business Property Relief.

At a glance

A business owner can apply to HMRC to see whether Inheritance Tax (IHT) Business Property Relief (BPR) is potentially available in respect of business property.

This is a non-statutory procedure and is only available in cases where there is material uncertainty as to the status of property. A material uncertainty could include the effect of possible transactions, such as takeovers. 

Business owners are advised to seek advice before making a clearance application on the following types of property:

• Property in mixed-use/mixed estates used for trade or business and investment activities.
• Furnished Holiday Letting businesses.
• Shares in holding companies of mixed activity groups.

The service is available where there is an immediate IHT charge, such as transfers into and out of a trust. It is not
available for: 

• Gifts to individuals.
• 10-year anniversary charges.
• Conditional disposition of property under a will.
• Deeds of variation. 
• The tax consequences of executing a trust deed.
• The application of the Settlements rules.
• Valuations.
• Requests for general confirmation of the status of businesses for BPR.

Where BPR applications involve a change of ownership of a business, any clearance given will remain valid for a limited period of six months.

Clearances may be given pre and post-transaction.

HMRC state they will usually reply within 28 days, although there is no absolute deadline that HMRC must meet, being a non-statutory process. 

For further information on BPR, see:

• Business Property Relief: a description of the qualifying conditions
• Business Property Relief & Furnished Holiday Letting: a summary of tribunal cases involving BPR and FHL's
• Business Property Relief: Holding companies: an update following dialogue between the CIOT and HMRC

Full details of HMRC's process are available here (link to HMRC). This also includes a checklist of items to include in the clearance application. 

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