»Ê¹ÚÌåÓýapp

Property based businesses may be trading, dealing in land and buildings, making or holding investments, or be a combination of these.

»Ê¹ÚÌåÓýapp rule excluding investment businesses (IHTM25261) from business relief applies to businesses consisting wholly or mainly of dealing in land or buildings. However this restriction does not deny relief for a business, an interest in a business or shares in a company which, at the time of the transfer, is carrying on a genuine building and construction business holding a number of properties (e.g. houses or plots awaiting development) as stock in trade.

»Ê¹ÚÌåÓýapp focus is on the nature of the business at the time of the transfer. So, for example, a business which started as a house builder but which, at the time of the transfer, had not built any houses in recent years and there is, for example, no evidence of reinvestment in a new development and it was selling off its land-bank would not quality for relief.

Some businesses will be hybrids in both property development and the holding of let properties. You should use the ‘wholly or mainly� test (IHTM25265) to evaluate whether these businesses are investment businesses.