Q&As

X owned shares in a private limited company which X sold and invested the net sale proceeds in other assets. The original holding of shares would have been eligible for BPR if X had held them at their death and the replacement assets met the conditions for BPR, except that X held them for only one year before their death. Can X's executors claim BPR in respect of the replacement assets due to section 107 of the Inheritance Tax Act 1984?

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Produced in partnership with Paul Davies of Clarke Willmott
Published on: 24 December 2020
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shares are relevant business property if they meet certain conditions, one of which is that the shares have been owned for at least two years (section 106 of the inheritance tax Act 1984 (IHTA 1984)).

However, relevant business property is treated as satisfying the two-year ownership period if it ‘replaces’ (directly or indirectly) other property, provided (a) the ‘new’ property and the ‘old’ property were, between them, owned by the transferor for a total period of at least two years falling within the five years immediately preceding the transfer of value and (b) the ‘old’ property

Paul Davies
Paul Davies

Clarke Willmott

Paul Davies is a partner in the private client team of Clarke Willmott. He is a solicitor, a chartered tax advisor, and a member of the Society of Trust and Estate Practitioners, as well as being a chartered accountant (albeit no longer practising as such). He specialises in providing advice across the range of different tax and legal issues that face high net worth individuals, executors, and trustees.

Paul's work spans all areas of private client work, including wills, trusts of all kind, inheritance tax, succession planning, probate and estate administration, and lasting powers of attorney.

Paul acts as a professional trustee for a number of family trusts, and is also regularly called on to act as a professional executor.

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Jurisdiction(s):
United Kingdom
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Key definition:
Shares definition
What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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