commercial property free of inheritance tax?

economic

Hi

i heard that commercial property can be exempt for inheritance tax purposes. if someone who owns a commercial property that they have let out passes away, would it be exempt from inheritance tax?

or does the commercial property need to be used for business by the person owning it for it to be exempt from inheritance tax?

thanks

greendoor665

This would really depend on the structure and nature of the person/business that owned the property. Are they a sole trader, a partnership or a limited company? Is letting out the property their only business or just part of it?

If you're talking about a person who just owns a commercial property that they let out and don't use for business themselves then no, it would not be exempt from inheritance tax.

economic

yeh a person who owns the commercial property and simply just lets it out and nothing more.

greendoor665

Then no, it wouldn't be free from inheritance tax. Certain types of agricultural property and woodland can be free from inheritance tax, maybe the person you heard this from got confused?

Malthusian

Business Property Relief is what your friend was thinking of, but as Greendoor says it needs to be part of a trading company.

You could always transfer it to a SIPP in which case it would be exempt from Inheritance Tax (although potentially subject to the tax on post age 75 pension death benefits instead).

ColdIron

I Googled 'commercial property inheritance tax' and this was the second result

http://www.grantthornton.co.uk/insights/avoiding-inheritance-tax-with-business-property-relief-beware-these-nightmare-scenarios/

You're welcome