How to claim Business Relief using schedule IHT413
Business Relief can remove up to 100% of the value of a trading business, a partnership share, or unquoted shares from the IHT calculation.
It's often the single largest relief in an estate that includes a business — but it has hard edges: a 2-year ownership clock, a trading-not-investment test, an excepted-assets rule that strips out surplus cash, and a binding-contract trap that can silently destroy the claim through a clause in a decades-old partnership agreement.
For deaths on or after 6 April 2026 the rules also change materially, with a cap on the amount relieved at 100%.
This walkthrough covers who qualifies, at which rate, what kills the relief, and how to complete the IHT413.
✓ Official source checked 23 August 2026 · GOV.UK last revised this form 6 April 2026IHT413 on GOV.UK ↗
United Kingdom·Informational, not legal or financial advice·Official source: GOV.UK
✓Official form · always current
This is the same official IHT413 file HM Revenue & Customs publishes on GOV.UK — the link below fetches the current version live from GOV.UK the moment you click it, so it can never go out of date.
Current version: April 2026 · confirmed on GOV.UK 23 August 2026
This walkthrough takes IHT413 field by field, in plain English. Working out the category and the two-year clock is usually straightforward; the hard part is finding a binding buy-and-sell clause buried in a partnership agreement before HMRC finds it, and knowing which 2026 reform figures apply to this death.
The thing most people get wrong
A binding 'buy and sell' clause in a partnership or shareholders' agreement — one that obliges the survivors to buy and the estate to sell — converts the business interest into a right to cash at the moment of death, and s.113 removes Business Relief entirely.
Cross-option agreements (where each side holds an option but neither is obliged) preserve the relief and achieve the same commercial outcome.
Executors should read the partnership or shareholders' agreement before claiming, not after HMRC asks.
The form, in summary
Valoren
IHT413·4 pages·33 fields guided
With Valoren45 minutes
Without Valoren2–4 hours
per business interest · the difficulty is establishing the ownership history and whether the trading test is met, not the form itself
Business Relief removes some or all of the value of qualifying business property from the IHT calculation.
At 100% it applies to an unincorporated business, an interest in a business (such as a partnership share), and unquoted shares; at 50% it applies to a controlling holding of quoted shares, and to land, buildings or machinery the deceased owned personally but which a partnership or a company they controlled used for its business.
The deceased must generally have owned the property for at least two years, and the business must be trading — a business that consists wholly or mainly of holding investments does not qualify.
One IHT413 is completed per business or asset; multiple interests need multiple forms.
·Who Files — The executor or administrator, as part of the IHT400 account — one IHT413 per business interest or asset
·4 pages · 33 fields guided
·Draws from your Estate File — Business Interests & Directorships, Financial Accounts, Civil Dossier
Section01
§11
Section 1
Does the estate qualify? — categories, rates, and the two-year clock
Business Relief is category-driven: what the property is determines the rate, and the ownership history determines whether relief is available at all.
01
The 100% category
A business or an interest in a business (including a partnership share), and unquoted shares.
'Unquoted' means not listed on a recognised stock exchange.
The relief applies to the net value of the business — assets used in the business less business liabilities — not to the gross turnover or a headline valuation.
02
The 50% category
Quoted shares that gave the deceased control of the company; and land, buildings, machinery or plant owned by the deceased personally but used wholly or mainly by a partnership of which they were a member, or a company they controlled.
The personally-owned trading premises is the most commonly missed 50% claim.
03
The two-year ownership rule
The deceased must normally have owned the property for at least two years at death (s.106).
Replacement rules (s.107) help where one qualifying asset replaced another — the combined ownership can count.
Property inherited from a spouse benefits from special rules that can shorten or remove the wait.
Check the acquisition date before anything else: if the two years fail, nothing else matters.
04
Trading, not investment
The business must not consist wholly or mainly of dealing in securities, stocks or shares, land or buildings, or making or holding investments (s.105(3)).
'Wholly or mainly' is assessed in the round — turnover, profit, capital employed, and time spent.
Mixed businesses (a farm with cottages let out; a trading company holding a property portfolio) need the balance examined honestly.
Business Relief is category-driven: what the property is determines the rate, and the ownership history determines whether relief is available at all.
HM Revenue & Customs (HMRC) · IHT413❦
Section02
§22
Section 2
The relief killers — contracts for sale and excepted assets
Two provisions destroy otherwise-good claims, and both are usually discovered too late — in HMRC correspondence rather than before the account is filed.
01
s.113 — a binding contract for sale
If, at death, the business property was subject to a binding contract for sale, relief is lost — the estate is treated as holding a right to sale proceeds, not business property.
The classic trap is a mandatory buy-and-sell clause in a partnership or shareholders' agreement.
Cross-option agreements — put and call options rather than obligations — do not trigger s.113 and are the standard fix.
Read the agreement's death provisions word by word.
02
s.112 — excepted assets
Assets owned by the business that were neither used wholly or mainly for business purposes throughout the two years before death nor required for future business use are carved out of the relieved value.
Surplus cash is the recurring battleground.
The relief is not all-or-nothing here: the value attributable to the excepted asset is excluded, the rest still qualifies.
03
Businesses that ceased or were winding down
Relief requires a business at the date of death.
A business that had ceased trading — or where the deceased's interest had already been dissolved to a mere entitlement to be paid out — may fail entirely.
Where the deceased was elderly and activity had tapered, gather evidence of continuing business activity (accounts, contracts, invoices) for the final period.
Two provisions destroy otherwise-good claims, and both are usually discovered too late — in HMRC correspondence rather than before the account is filed.
HM Revenue & Customs (HMRC) · IHT413❦
Section03
§33
Section 3
Deaths on or after 6 April 2026 — the reformed regime
The 2026 reforms are the biggest change to Business Relief in a generation, and the walkthrough must branch on the date of death.
01
A cap on 100% relief
For deaths on or after 6 April 2026, 100% relief is limited to a combined £2.5 million allowance across agricultural and business property.
Qualifying value above the cap is relieved at 50% rather than 100% (an effective 20% rate on the excess, since the standard rate is 40%).
Estates with substantial business or farm property spanning this boundary need the allocation worked through carefully.
02
AIM and similar markets move to 50%
Shares on a recognised stock exchange designated as 'not listed' — which includes AIM — and equivalent shares on unrecognised foreign exchanges are relieved at 50% only under the reformed regime, regardless of the £2.5 million cap.
Portfolios built around 'AIM IHT relief' before the change need revaluing on that assumption.
03
Transferable unused allowance and instalments
The reformed regime allows unused allowance to transfer from a predeceased spouse or civil partner, in the manner of the transferable nil-rate band — and if the first death was before 6 April 2026, the FULL £2.5 million allowance is assumed available to transfer.
The 10-year interest-free instalment option is extended to all agricultural- and business-relief-qualifying property, including qualifying shares.
The 2026 reforms are the biggest change to Business Relief in a generation, and the walkthrough must branch on the date of death.
HM Revenue & Customs (HMRC) · IHT413❦
Section04
§44
Section 4
Completing the IHT413
One form per business or asset. The form walks the ownership, structure, and value questions in order — the preparation work is assembling the evidence behind each answer.
01
Ownership and structure
The nature of the business, the deceased's interest (sole trader, partner, shareholder), when the interest was acquired, and whether any contract for sale existed at death.
Have the partnership or shareholders' agreement to hand — the form asks the s.113 question directly.
02
Value and the balance sheet
The net value claimed, supported by accounts.
For partnership shares, the basis of the deceased's capital and current account entitlement; for shares, the shareholding and the company's overall position.
Where premises are owned personally and used by the business, they belong in the 50% section — not inside the business value.
03
Assets used by the business and lifetime gifts
Page 3 covers personally-owned assets used by the company or partnership (the 50% category), and Business Relief claimed on lifetime gifts — where the transferee's continued ownership and the property's continued qualification to the transferor's death both matter.
Page 4 is free-text additional information: use it to pre-empt the obvious HMRC queries (why the cash balance is working capital; what the replacement-property history was).
One form per business or asset. The form walks the ownership, structure, and value questions in order — the preparation work is assembling the evidence behind each answer.
HM Revenue & Customs (HMRC) · IHT413❦
Many people file IHT413 themselves — that is what this walkthrough is for. If the estate behind it has stopped being simple — inheritance tax to pay, a trust, foreign assets, a dispute — Signum, Valoren’s own specialist desk, can take it on, and we say so plainly: it starts with a free intake, and if you do not need us, we will tell you. Prefer an independent adviser? STEP and the Chartered Institute of Taxation both keep public member directories, and neither pays Valoren a referral fee.
FAQ
IHT413 questions, answered.
100%: a sole-trader business, an interest in a business (a partnership share), and unquoted shares (in most cases, whatever the size of the holding).
50%: quoted shares only where the deceased had control of the company, and land, buildings, plant or machinery owned personally by the deceased but used by a partnership they were in or a company they controlled.
Assets in the 50% category are commonly missed — a farmer or director who personally owns the yard or premises their company trades from should always check this category.
For deaths before 6 April 2026, unquoted status has generally extended to AIM-listed shares at 100%.
For deaths on or after 6 April 2026, shares on a recognised stock exchange designated as 'not listed' (which includes AIM) and equivalent shares on foreign markets that are not recognised stock exchanges are relieved at 50% only.
The date of death, not the date the form is filed, decides which regime applies.
Yes. s.112 excludes 'excepted assets' — assets neither used wholly or mainly for the business in the two years before death nor required for future business use.
A cash pile beyond sensible working capital is the classic example: HMRC will seek to strip it out of the relieved value.
Contemporaneous evidence of why the cash was held (a planned acquisition, a known liability) is what wins these arguments.
A business that consists wholly or mainly of holding investments does not qualify (s.105(3)).
Furnished holiday lettings have repeatedly been fought over, and HMRC's settled position — supported by most of the case law — is that they usually fail unless the services provided go well beyond what an investor-landlord would supply.
Take advice before assuming a lettings business qualifies.
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Where this fits
IHT413 is one form. The file behind it is the rest.
The claim stands or falls on ownership history, the shareholding or partnership structure, and what the business agreements actually say.
The Business Interests & Directorships record holds the registrations, shareholdings and the location of the agreements; the Financial Accounts record evidences the two-year picture.
When you're ready — not before — our £179 Executor's First Hour walks you through registering the death, notifying banks and pensions, and getting probate started, in the right order. The free checklist above covers the essentials; this is for when you'd rather have a hand to hold. Executor's First Hour — £179 →
HM Revenue & Customs (HMRC)·33 fields·No separate fee — supplementary schedule filed with IHT400·45 minutes with Valoren
The return this attaches to
This is one schedule. It attaches to the IHT400 — the main Inheritance Tax account — which is where every schedule you complete comes together.