Business property relief (BPR) from inheritance tax is not available for businesses that “consist wholly or mainly of dealing in securities, stocks or shares, land or buildings or making or holding investments” (s 105(3), Inheritance Tax Act 1984).

The usual position is that holiday lets are run as investments and consequently do not attract BPR. However, a recent case has challenged this position.

In the First-tier Tax Tribunal case of Graham' Representatives v HMRC [2018] UKFTT 306 TC, the taxpayer challenged the position that holding land to obtain an income is an investment. The taxpayer argued that a letting with other activities and services should be able to attract BPR. In this case Mrs Graham's lettings were provided with other services such as a pool, sauna, bikes and generous personal care. The First-tier Tax Tribunal agreed with the position that the land was not held mainly for investment purposes, and allowed BPR.

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