Gift and Inheritance tax planning – Business Asset Relief

Gift and Inheritance tax planning – Business Asset Relief

Gift and Inheritance tax planning – Business Asset Relief

The decision to pass on a business to the next generation can be a big step for any family. Whilst commercial and family dynamics are key concerns, the matter of taxation should be high up on the agenda to ensure that tax costs for the outgoing shareholders and the incoming family members are minimised.Therefore, Business Relief is an extremely important relief to consider if much of your family’s accumulated wealth is tied up in a business. We have outlined below the key benefits and conditions of Business Asset Relief.

Business relief

Business Relief provides a 90% reduction in the taxable value of gifts or inheritances of ‘Relevant Business Property’ for CAT purposes.

The definition of Relevant Business Property can be complex, below is a list of examples of what constitutes Relevant Business Property for the purposes of the relief:

  1. A business or an interest in a business,
  2. 25% of the voting shares in an unquoted company ,
  3. Shares in an unquoted company that is controlled by the recipient and their
    close family,
  4. 10% of shares in a company in which the recipient has been a full-time
    working officer or employee for a minimum of 5 years prior to the gift or
  5. Land, buildings, plant or machinery used in the business,
  6. Quoted Shares (Subject to a number of conditions)


The key conditions

  • Business relief applies to trading businesses only and as such is not applicable to businesses that wholly or mainly deal in currencies, securities, stocks, shares, land or buildings as well as businesses who mainly hold investments.

  • There is a minimum ownership period in order to qualify for the relief- meaning that the person giving the assets must have owned them for a period of 5 years prior to gifting them or 2 years in the case of an inheritance.

  • There is a clawback of relief in a case where the assets cease to qualify as relevant business property and/or are disposed of within 6 years of the gift or inheritance. This clawback will not apply where the asset in question is replaced by other Relevant Business Property within 1 year.

Other Points to note.

A CAT Return must be filed in cases where Business Relief is claimed regardless of the 80% threshold for a CAT return which was in place previously. 

This relief can be utilised as a highly effective planning tool and can be claimed alongside Retirement Relief for Capital Gains Tax (CGT). Furthermore, it may be possible to plan for a BR claim by putting a Tax Efficient Will in place.

If you would like to discuss further planning, please contact a member of our team who have considerable expertise in this area.

Please note: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

Warren & Partners are a boutique Irish tax and business advisory firm based in Ballsbridge, Dublin. Our experienced-team of tax advisors will create unique tax solutions for your specific business needs.