BPR ― the ‘wholly or mainly’ test

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note considers the key test for BPR ― the ‘wholly or mainly’ test, how it is defined and how it is applied. It then considers the considerable body of case law relating to the test and how this has been applied to different types of businesses by the courts. It also considers hybrid businesses and how BPR is applied to them.

Wholly or mainly ― overview

In this note, for ease of reference, ‘trading’ is used to mean a business that does not consist wholly or mainly of making or holding investments and ‘investment’ to mean a business that does consist wholly or mainly of making or holding investments though these are not terms used in the legislation and are generally best avoided in any technical analysis other than as shorthand.

The purpose of the legislation is to give relief to trading businesses. Therefore, BPR is not available on a business which is wholly or mainly

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