BPR Replacement Property Relief Question

[jokerman]

I (as a trustee) recently sold shares in a private company which qualified for BPR as they had been held for many years. I want to reinvest some (but not all) of the proceeds from this sale into other BPR qualifying shares (probably via the IHT services offered by some financial companies).

Can anybody confirm whether a partial reinvestment of the proceeds will qualify for the BPR replacement relief? The shares are in trust and the 10-year charge will be arising soon. If replacement relief is available for these then the value of these new investments would, as I understand it, not be subject to the 10 yearly charge.

I have read conflicting advice on whether replacement relief is available for a partial reinvestment. I can't see anything in HMRC rules that imply only a wholesale reinvestment qualifies. Also, do I need to register to claim replacement relief?

Thanks in advance.

[Lee Young]

When you reinvest, if this is done within the time limit then the amount held in qualifying assets at the time of the relevant IHT charge will benefit from the relief. The amount not invested will not.

[jokerman]

That's what I hoped !

But there are a number of people who seem to disagree. I'm wondering how that can be the case: is it unclear?

I noticed references to IHTA 1984, 113(B) which says:

F1113B Application of section 113A to replacement property.
(1)Subject to subsection (2) below, this section applies where—
(a)the transferee has disposed of all or part of the original property before the death of the transferor; and
(b)the whole of the consideration received by him for the disposal has been applied by him in acquiring other property (in this section referred to as “the replacement property”).

Is this the point of confusion? What is this actually saying?

Thanks!

[AGoodman]

s.113B is saying just what you think it is - but it only applies in relation to clawback - i.e. where A has given an asset to B and then A dies within 7 years.
Ten yearly charges that you mentioned are subject to the more lenient rules under s.107.

[dominoman]

Re-opening an old thread here. Thought better than starting a new one on same topic.

I am also unclear on whether the full amount of the disposal needs to be reinvested. The guidance above says not. But other guidance online says you must.
e.g. See https://www.kuberventures.co.uk/kuber-bpr/replacement-property-relief/

Another condition is that you must reinvest the entire proceeds of any sale in qualifying assets. Paying fees associated with reinvestment out of the proceeds is allowed however, you cannot take some of the proceeds and spend them.

Also here: https://intelligent-partnership.com/wp-content/uploads/2016/06/BPR-2016.pdf

Manager buys replacement shares with entire funds from non-qualifying share proceeds

In my late father's case if he sold 100k of EIS shares 2 years ago, and reinvested 60k in new EIS shares, the above implies that even the 60k isnt protected by BPR. Is that right?

[dominoman]

Hi - Is anyone able to help clarify this question around whether the whole amount has to be reinvested in order to claim replacement BPR? i.e. If I sell 100k and reinvest 60k is that 60k protected? Many thanks for any advice. I've searched and searched and am no clearer.