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Where business property ('the replacement property') has replaced other business property ('the original property') then BPR will be available on a chargeable transfer of the replacement property as long as two conditions are met. These are:

1. Ìý

   •ÌýÌýÌýÌý the combined ownership period of the original property and replacement property totals at least two years out of the five years immediately preceding the transfer, and

2. Ìý

   •ÌýÌýÌýÌý the original property and replacement property must both have been relevant business property (other than the requirement that they must have been held for two years)¹

HMRC take the view that 'replacement' means that there has to be some tangible connection or link between the original property and the replacement property².

For example:

J sells unquoted shares in a trading company, A Ltd and uses the proceeds to buy unquoted shares in a trading company, B Ltd. J has 'replaced' A Ltd shares with B Ltd shares. If instead J spent the proceeds of the A Ltd shares on a main residence