Business Property Relief Changes – Action to Take Now to Reduce Inheritance Tax

Date: May 12, 2025

Announced at the Autumn Budget 2024, the Government will implement significant reforms to Business Property Relief (BPR) from 6 April 2026. Many people with holdings in business or agricultural assets, including unlisted or AIM shares, could face increased inheritance tax liabilities under the new rules.

At Alexander & Co, we are urging business owners and high-net-worth individuals to review their estate plans now, even if these have been reviewed in the last year. This will help them to take advantage of current reliefs and avoid potential pitfalls before the changes apply. Below is a useful guide on what you need to know and what actions to urgently consider.

This information is based on the current understanding of the proposed changes. Final legislation is yet to be published.

Published by Alexander & Co | Expert Inheritance Tax Advisors

What’s Changing to Business Property Relief in April 2026?

Key changes include:

A new £1 million allowance per estate will retain the 100% relief rate for combined qualifying business and agricultural assets.
These reliefs will be reduced to 50% for any combined value exceeding £1 million.
AIM shares will no longer qualify for 100% relief, this will be reduced to 50%, regardless of value. Unquoted trading shares not on AIM will qualify for 100% relief up to a cap.
Lifetime transfers (gifts) made from 30.10.2024 will fall under the new regime where the donor dies on 6 April 2026 or within seven years of this date.
These reforms are designed to target reliefs more effectively but will significantly increase tax exposure on many estates and businesses.
The Business Property Relief £1m allowance does not pass between spouses

Who Will Be Affected by Business Property Relief and Agricultural Relief Reforms?

You may be affected if:

You hold shares in unquoted trading companies
You own or operate a family or owner-managed business with a value exceeding £1 million
Your estate includes a mix of agricultural and also business assets
You have already established or are considering establishing trust structures

Inheritance Tax Planning – What Actions to Take Now regarding Business Property Relief

Review Your Business and Investment Holdings

Evaluate which assets currently qualify for BPR and project their value by 2026. Unquoted shares should receive particular attention due to the change in relief rate.

Plan Lifetime Transfers Strategically

Make lifetime gifts of business property within the allowed revised limits.

Consider Trust Structures Carefully

While trusts remain a useful IHT planning tool, note that from April 2026, the £1 million BPR/APR allowance will also apply to each trust individually but will be divided if multiple trusts are created after 30 October 2024.

Update Your Will and IHT Strategy

Ensure your will reflects the upcoming changes. Also, work with professional tax advisors to integrate business asset reliefs with other strategies, such as spousal exemptions and the residence nil-rate band.

Get a Professional Business Valuation

Accurate business valuations are essential for effective planning. Additionally, knowing the current and projected value of qualifying assets helps to ensure you use your £1 million allowance effectively.

How Alexander & Co Can Help You Navigate Business Property Relief Changes

At Alexander & Co, our team specialises in inheritance tax planning, business structuring, and succession strategies. With these changes approaching, we are helping business owners and families across the UK protect their estates.

Our services include:

Full estate review from a tax perspective
Reviewing and restructuring qualifying business assets
Advising on tax-efficient share transfers
Creating and managing trust structures
Navigating lifetime gifts and compliance with new rules

To ensure your estate is protected and tax-efficient under the 2026 BPR and APR rules, act now. Our expert team can help you:

Minimise inheritance tax exposure
Maximise available reliefs
Plan succession effectively

Contact Alexander & Co today to schedule a confidential IHT planning consultation

For further advice on Business Property Relief, inheritance tax planning or any other tax-related queries, please contact Alexander & Co to see how we can assist you:

Phone: 0161 832 4841
Email: info@alexander.co.uk
Website: www.alexander.co.uk

You can also use the contact forms on this page.

Our offices are conveniently located in Manchester and London, serving clients across the UK.

Frequently Asked Questions on Business Property Relief and Agricultural relief

Q1: What is Business Property Relief, and how does it reduce inheritance tax?

BPR allows certain business assets to be passed on with up to 100% relief from inheritance tax, helping owner-managed and also family businesses continue without significant tax burdens. This is being reduced from April 2026, with new rules applying in the interim also.

Q2: Will Business Property Relief and Agricultural Relief be limited from April 2026?

Yes, and this also includes agricultural assets, which will also be subject to the new £1 million cap for 100% relief, with 50% relief applying beyond this limit.

Q3: Can I still use trusts to reduce my IHT bill?

Yes, but with limitations from April 2026. Because the £1 million cap is to also apply where assets are held in trusts. New rules will apply where multiple trusts over £1 million are set up after 30 October 2024, where more than £1 million can be transferred. However the settler must survive for seven years to tax full advantage of the tax relief for trusts set up during this transitionary this period.

Q4: How can I ensure my lifetime gifts still qualify for full BPR?

Make qualifying gifts (subject to the relevant limits) and ensure the recipient retains ownership until your death to preserve 100% relief under the current regime. for gifts over the £1 million limit before April 2026, the benefactor would need to survive seven years form the date of the gift to the donor to receive the full tax benefit.