To qualify for Business Property Relief, the business concerned must be trading in the UK. They cannot be investment companies and they cannot be listed on the London Stock Exchange.

Many family businesses would therefore qualify. However, there are also BPR qualifying investment opportunities through certain specialist managers who put together portfolios of certain AIM-listed and unquoted companies for the benefit of others.

It should be noted here that investment in smaller companies and small businesses carries a much higher risk than investing in larger, established and listed companies. Some of the reason for offering BPR on such investments is to offset some of this higher risk to the original value of investments. 

​However, regardless of any tax incentives available, if you are a moderately cautious investor, or someone who couldn’t live with the unknown valuations and volatility of such, BPR related business investments are probably not appropriate for you.

On the plus side, though, if you are more adventurous and have the means to support BPR related investments, they do offer some advantages:

• Unlike gifts into trusts, which qualify for full IHT exemption only after 7 years, BPR investments qualify for IHT exemption after being held for just 2 years (provided they are still held at the time of death)

• The investor making the decision – you – retain full control over whether to hold that investment or sell and take the money back. As long as your realise this means they then lose their IHT exemption (though you can, of course, reinvest those proceeds and they will be exempt a second time after a further 2 years).

• Buying shares is pretty straightforward compared to setting up trusts and life assurance. There is no need for a legal contract and no underwriting of health or other issues.

The value of a BPR-qualifying investment portfolio will depend on the performance of the companies it invests in. 

With an investment like this, your capital will be at risk and you may get back less than you invest. Your tax treatment depends on your personal circumstances and may change in the future. Whether the investment qualifies for BPR will depend on the portfolio companies maintaining their qualifying status. HMRC will consider a claim for BPR based on the facts when a claim is made, including the relevant legislation in place at the time. 

Investments in AIM-listed and unquoted companies are likely to fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell. 

Past performance is not a reliable indicator of future results.