Business property relief unavailable for shares in an investment (property letting) company

Section 105(1) Inheritance Tax Act 1984 includes unquoted shares in a company within 'relevant business property'. However, s.105(3) provides that shares in a company are not relevant business property if the company's business 'consists wholly or mainly of one or more of the following, that is to say, dealing in securities, stocks or shares, land or buildings or making or holding investments'. Owning and letting residential flats is a business of making or holding investments, so the exclusion applies and Lucinda's shares do not qualify for BPR at any rate. The length of ownership, her control of the company and her personal involvement as a director cannot overcome the s.105(3) exclusion. The full value of the shares is therefore within her death estate for inheritance tax. For transfers on or after 6 April 2026, 100% BPR is limited to a £2.5 million allowance shared with APR, with 50% relief above it (IHTA 1984 ss.104(1)-(1A) and 124D, inserted by Finance Act 2026). That change does not help Lucinda: investment-company shares are not relevant business property at all, so no relief is available at either rate.

Why A is wrong: Unquoted status and the two-year ownership period are necessary, but they do not override the investment business exclusion in s.105(3).

Why B is wrong: Control is irrelevant where s.105(3) applies; the shares are not relevant business property at all.

Why C is wrong: Personal work in the business does not change the nature of the company's business, which is holding investments.

Why E is wrong: Unquoted shares, and controlling holdings of quoted shares, can be relevant business property under s.105(1); they fail here only because of s.105(3).