BR Guide Second Edition

5 THE IHT LANDSCAPE The original purpose of the relief when it was introduced in 1976, was to prevent small businesses having to be broken up and sold to raise the funds required to pay the IHT liability when the business owner passed away. BR is a statutory relief, enshrined in law, and has gone through various changes to its scope and developments of its rules. Managers who specialise in these investments began launching estate planning services in response to growing consumer demand. The first of these was launched in 1996 and that service continues today as TIME:CTC. Since then, the number of BR services has soared to offer a wide range of objectives, risk profiles and investment strategies. BR now also acts as an incentive to encourage investment into qualifying, unquoted small businesses which account for a large proportion of employment in the UK, and of course make a large contribution to the tax base. The Office for Tax Simplification’s Inheritance Tax Review – first report: Overview of the tax and dealing with administration, published in November 2018, states, "The evidence gathered so far suggests the reliefs (BR and Agricultural Property Relief) are broadly working in a straightforward way”. See page 10 for more on the OTS IHT review. The OTS notes... the government’s commitment to protecting the important role that BR plays in supporting family owned businesses and growth investment in AIM and other growth markets. In correspondence and meetings, the OTS has heard evidence of its importance in meeting that objective. OFFICE OF TAX SIMPLIFICATION, INHERITANCE TAX REVIEW – SECOND REPORT: SIMPLIFYING THE DESIGN OF INHERITANCE TAX, JULY 2019 1996 The 100% relief was extended to minority investors in a qualifying company. Fund managers started to build relevant share portfolios for individuals. 1976 2013 30% BR Relief established Rules changed so that the use of debt to acquire BR assets invalidates IHT mitigation 2014 100% BR Relief introduced 1992 0.5% stamp duty on shares traded on AIM was abolished 0.5% 50% BR Relief introduced 1987 AIM shares became eligible to be held in an ISA AIM Business Relief Timeline of relevant events SOURCE: INTELLIGENT PARTNERSHIP IHT as it Stands NUMBER OF BR OFFERS 1995 2000 2005 2010 2015 2020 0 10 20 30 40 50 60 70 SOURCE: MICAP, AUGUST 2019