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Business property?

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11 November 2014
Issue: 4477 / Categories: Forum & Feedback , Business

Is the value of shares in a subsidiary eligible for business property relief?

I am an officer and the controlling shareholder of a company X Ltd. A few years ago the company entered into an agreement with an individual software developer and we have developed a successful piece of software.

The intellectual property (IP) is held in a company Y Ltd. The developer holds 50% of the ordinary share capital of Y Ltd and X Ltd holds the other 50%.~

X Ltd markets and sells the software and pays royalties to Y Ltd which pays a salary to the developer and dividends are paid out periodically. There are no family connections and all agreements are commercial. X Ltd continues its original trade as well.

It has been suggested to me that inheritance tax business property relief on the share capital in X Ltd may be denied because the investment in Y Ltd (not a group company) is only 50% under...

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