ACCA Advanced Taxation (ATX) Practice Exam

Is Business Property Relief (BPR) or Agricultural Property Relief (APR) applicable for an asset under a binding contract for sale at the date of transfer?

1. Yes, it remains applicable

2. No, it is not available

3. Only if the sale is below the market value

4. It depends on the nature of the asset

The correct answer is: No, it is not available

Business Property Relief (BPR) and Agricultural Property Relief (APR) are both types of reliefs in the context of inheritance tax in the UK, designed to reduce the value of property for tax purposes. When an asset is under a binding contract for sale at the time of transfer, it is considered to be excluded from these reliefs. The rationale behind this is that once an asset is in a contract to be sold, it is effectively no longer owned outright by the seller and is not being used in a qualifying business or agricultural activity for the purpose of the reliefs. This means that the reliefs are specifically aimed at properties that the transferor owns and actively uses in a qualifying capacity. Therefore, since the asset is under a binding contract for sale and does not meet the criteria for ongoing ownership or use, it does not qualify for BPR or APR. Other options may suggest situations where relief could still apply or depend on different factors, but under the standard rules, the presence of a binding sale contract removes any entitlement to these particular reliefs.