Joe Brough looks at the implications on capital taxes for companies holding investment assets.
Over time, profitable companies will increase their cash and distributable reserves if not paid out to shareholders. To facilitate further growth, these reserves may be invested into non-trading assets.
Business property relief
Where an individual dies owning shares in a trading company which they have held for two years, business property relief (BPR) provides relief from inheritance tax.
For deaths up until 5 April 2026, the BPR legislation (IHTA 1984, s 105(bb)) provides for 100% BPR to apply to all shareholdings in unlisted trading companies. From 6 April 2026, 100% relief will only apply to the first £1m of combined qualifying agricultural and business assets, with 50% relief for qualifying assets over £1m.
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