ACCA Advanced Taxation (ATX) Practice Exam

When will BPR or APR be withdrawn from IHT calculations on lifetime gifts?

1. When it is transferred to another person

2. If the asset is not relevant property

3. If the donee sells the asset

4. When the asset is gifted to a sibling

The correct answer is: If the asset is not relevant property

Business Property Relief (BPR) and Agricultural Property Relief (APR) are both important provisions in Inheritance Tax (IHT) legislation that help reduce the tax liability on lifetime gifts. The correct answer focuses on the circumstances under which these reliefs might be withdrawn from consideration in IHT calculations for lifetime gifts. BPR and APR are specifically applicable to certain types of property, namely those associated with a business or agricultural activity. If an asset is not classified as relevant property—meaning it does not fall within the definitions that qualify for BPR or APR—then the relief cannot be applied. This breakdown is critical because only applicable assets can be exempted from IHT, determining the overall impact on the tax liability. In essence, BPR or APR will be withdrawn from IHT calculations when the asset being transferred does not meet the criteria necessary for these reliefs. This situation might arise due to the nature of the asset itself, which may not qualify as business or agricultural property for IHT considerations. The other options do not directly address the conditions under which BPR or APR is withdrawn due to the nature of the asset relative to the reliefs’ criteria. For instance, transferring to another person, selling the asset, or giving it to a sibling