Skip to Content

Business property relief, inheritance tax, and holiday homes

Business property relief, inheritance tax, and holiday homes
Monday, August 13, 2018

In the last couple of years, there has been a growing number of claims to HMRC for business property relief on holiday homes.


In this article, Panthera presents a summary of:


• what inheritance tax is,

• what business property relief is, and

• whether any holiday home owners have made successful claims for business property relief on their holiday homes.


What is Inheritance Tax?


Inheritance tax is paid on the estate of a person who has recently passed away. An estate is the value of all the property, possessions, and cash held by that person minus the value of all of their liabilities (outstanding mortgage, outstanding loans, and so on).


Inheritance tax is paid on the value of an estate when it is bequeathed to other people if the value of the estate is greater than £325,000, unless someone passes their estate onto their spouse or civil partner.


Inheritance tax is fiendishly complicated – we couldn’t possibly do it justice in one article. We’ll do a big one on it soon. Suffice to say however that business property relief can reduce the value of an estate and that’s why many people want to use it to bring down any potential inheritance tax bill or to reduce the value of the estate to under £325,000.


What is Business Property Relief?


Business Property Relief (also called business release) is given at either 50% or 100% of value of the business assets contained in a deceased person’s “estate” which can be passed onto someone else.


100% relief is given on either shares of or interest in in an unlisted company. 50% relief is awarded if:


• the shares being bequeathed hold more than half of the voting rights in a listed company

• machinery, buildings, or land were owned by the person who has passed away and the machinery, buildings, or land were used by a business in which they were a partner or over which they had control

• machinery, buildings, or land held in a trust and used by a business


The relief is only given if the person who has died owned the machinery, buildings, land, asset, or business for two years prior to their death.


Recently, there has been an increase in the number of people who are claiming for business relief on an inherited holiday home in attempt to lower the value of the deceased’s estate whether in an attempt to reduce their tax liabilities or to reduce the value of the deceased’s estate under £325,000.


The people who are attempting to do this are doing so on the basis that the property in question was being run as a business at the time of the person’s death. However, HM Revenue & Customs (HMRC) have been adamant in recent statements that business relief can’t be claimed for holiday homes. 


Have any cases for business relief on holiday homes been successful?


Despite their adamant denials to the contrary, a very recent tax tribunal case casts doubt on the certainty of their position.


In April 2018, a case was brought to the First Tier Tribunal (FTT) which went in favour of the tax payer claiming business relief on a holiday home. In this case, Mrs. Graham had owned a property in the Isles of Sicily which her daughter, Louise Graham, inherited after her death.


That property had previously operated from the name “Carnwethers” and it was a large farmhouse with four self-catering flats inside of it.


The Graham family had offered services such as welcome packs, a sauna, and a pool as well as supplies like tea and coffee. Before her mother’s passing, Louise Graham would work throughout the night to make their guests feel welcome by helping them if they required assistance throughout the night.


The Graham’s claim for business relief was contested by HMRC on the basis that the property was held as an investment and not a business.


After this, the Grahams took their claim to the FTT and, as part of the case, the tribunal carefully evaluated each individual service that had been provided to guests. In the end, FTT decided that the Graham’s property was in fact mainly ran as a business.


The Graham’s claim for business relief was accepted because the services they had provided were substantial enough to class their property as a business. The FTT said that that their case was “exceptional” and fell “on the non-mainly-investment side of the line”.


While the Graham’s won their business relief claim, the vast majority of claims made are ultimately rejected by HMRC and the FTT. This case highlights the scope of the services that a holiday homeowner needs to provide their guests with in order to stand a chance of winning a business relief claim.


While the Graham’s case is the First-tier Tribunal that’s gone in the favour of the tax payer for a long time, HMRC still holds the power to appeal the decision by taking the case to the Upper Tier Tribunal.


Do you need tax advice?


This is a complicated area of taxation where we would strongly advice that you engage with our accountants to help you present the strongest possible case so that, if your interest in a holiday home meets the requirements given by the FTT judge so that it could be classed as a business rather than an investment, we can help you prove it to HMRC.


Contact Panthera Accounting on 01235 768 561 or drop us an email to for help.

What our clients say

For us, there is nothing better than a happy customer. Here are just a few that let us know how much we mean to them.

Pete Dungey

Simple, efficient and most importantly, hassle-free.

We found Panthera via our search for a Xero expert. We knew the software we wanted to use, and needed a forward-thinking accountancy partner who could get us up and running, and teach us the ropes moving forward. Tory and her team have always been on hand to answer our questions, and help us to grow as a business, particularly during periods of big change, such as becoming VAT registered. They are always on hand to alleviate any concerns and help to keep our records in order, which makes our year-end accounts an absolute breeze! Being based in Bristol, our relationship is entirely email based, alongside one consolidation meeting at year end - this keeps things simple, efficient and most importantly, hassle-free.

Pete Dungey Kaleido Grafik Limited
Anita van Eijndhoven

Talk Our Language

The support and service we receive from Panthera Accounting is very good. Everything from regular meetings, a prompt e mail response and the transition of our Xero software (which we find very pro active indeed) has and is all remarkably efficient. We find Panthera talk our language and make any process as painless and easy as possible.

Anita van Eijndhoven Quidne-IT
Ash & Tim Lane

Panthera brush aside the stereotype of the typical accountant

We got in touch with Panthera Accounting by way of a recommendation; we haven't looked anywhere else since. They are an extremely professional yet relaxed group of people. We were slightly daunted by the idea of accountants but Panthera brushed aside y the stereotypes. They are very understanding when answering any questions we may have. They are completely efficient, offer sound business advice, and are fantastically priced. We will continue to recommend them.

Ash & Tim Lane Starveacre Fencing
Jayne Johnson

An Asset to my Business!

The whole team at Panthera are great! Working with them has been a huge support to my growing business. They help me to understand the numbers I need to know. They give me technology solutions like Xero so that I can process things quickly and have access to my own figures. They are quick to reply, highly knowledgeable, nothing is too much trouble and as well as making sure that everything is compliant and on time, they are enthusiastic, professional and fun to work with.

Jayne Johnson Better People
John Baker

Absolute joy - they provide a first class service on every level

Working with Tory and the team at Panthera is an absolute joy - they provide a first class service on every level; from simple Xero issues through to more complicated tax enquiries, they’re always on-hand to help me get it right. I’m certainly not their biggest customer, but I’m always made to feel like their most important one.

John Baker BKR Solutions
John Castle

Professional and Friendly

I would like to say that Panthera Accounting have helped me with my business accounts for more than 4 years now. They have consistently offered an excellent competitively priced service that works both professionally and in such a friendly way that I would highly recommend them to everyone considering using their services.

John Castle Ilexanna Limited & Birch Castle Homes Limited
Jonathan Morrison

They are always there to answer queries and sort out issues

I had been with Mr Dunn for 20 years when upon his death Panthera took over the business. They now play a bigger part in the running of my business, they do all the stuff that has to be done but I don't like doing ie book keeping, VAT, wages, and returns. They are always there to answer queries and sort out issues and make sure all Tax deadlines are met. Their costs are fair, service is great and I have and would highly recommend them.

Jonathan Morrison Wallingford Builders
Pippa Scott

Professional, friendly and personal service.

Panthera Accounting have gone above and beyond the call of duty to guide and support our Company. They offer a professional, friendly and personal service that can take the stressful and sometimes frightening feelings out of running a business. They have guided us through the working of Xero and have offered “teaching sessions” on the day to day running of the accountancy package. Our only regret is that we didn’t join their team earlier.

Pippa Scott Scott's Commercial Services Limited
Sara Southey

Panthera puts the personal back in to accountancy!

Tory and her team have provided a friendly, approachable and helpful service from the start. They have delivered a quality service, above and beyond anything I could have expected. Panthera, with the help of the Xero package, have taken the stress, strain and confusion out of managing my company and personal accounts. I look forward to working with them for many years to come.

Sara Southey Bluestones Garden Design
Tracey Miller

Panthera are fantastic.

Panthera are fantastic. Always professional, going the extra mile for their clients and delivering superb service. I recommend them all the time to my clients.

Tracey Miller Bigger, Brighter, Bolder BBB

Contact Us

Panthera will use the details that you have entered into this form to communicate with you on the subject of your message, and for no other purpose.
Please see our privacy policy for more details on how we manage your data.

Lets Get Started

Move to Panthera

Moving to Panthera is as easy as 1,2,3...

  1. We jump on a quick call to create the perfect service package for your business
  2. You e-sign your terms of engagement
  3. We get your authority to talk to HMRC on your behalf

And that’s it! From contacting your previous accountant, to updating Companies House with your new registered office address, let us handle all of the admin so that you can get on with running your business, safe in the knowledge that everything is going smoothly in the background.

Talk to Us