Business Relief from Inheritance Tax: Warning as BPR Changes to Make Existing Wills Ineffective
also Significant changes to Business Property Relief (“BPR”) take effect from 6 April 2026, introducing a cap that could result in substantial Inheritance Tax (IHT) liabilities for business owners. Changes to Business Relief from Inheritance Tax will directly impact the effectiveness of existing wills and estate planning strategies. As trusted Chartered Accountants and Tax Advisors, we explain the implications of the new BPR rules and outline urgent actions company owners should take to mitigate potential tax exposure.
What Is Business Property Relief (BPR)?
Business Property Relief currently provides up to 100% relief from Inheritance Tax on qualifying business assets. This has allowed entrepreneurs, company directors, and shareholders to pass on trading business interests tax-efficiently, encouraging family business continuity.
Under the current regime:
- 100% BPR is available on qualifying shares in unquoted trading companies once held for two years. This includes those listed on AIM.
- Relief is uncapped.
From 6 April 2026, this is set to change dramatically. Because of this, we are recommending seeking advice urgently, as implementing changes correctly can take time
Published by Alexander & Co | Expert Tax Advisors
What is Changing from April 2026 That Will Affect Business Relief from Inheritance Tax?
Announced in the Autumn Statement 2025 and now also confirmed in draft legislation, the UK Government is introducing a new cap on BPR:
- A £1 million lifetime cap on each individual is to apply to the total value of qualifying business and agricultural property.
- Values above £1 million will only attract a 50% relief instead of 100%. This will result in an effective 20% Inheritance Tax charge on the excess.
- The cap is not transferable between spouses or civil partners.
- The £1 million limit is not scheduled to increase annually until at least 2029/30.
These changes significantly alter the estate planning landscape for business owners, especially those with high-value enterprises or multiple holdings.
Business Relief from Inheritance Tax: How Will the Changes Affect Existing Wills?
Many existing wills assume full BPR on business assets. These changes from 2026 make these assumptions invalid in several key scenarios:
- Wills Leaving Business Assets to Spouses: Current strategies often rely on the spouse inheriting unused BPR. Starting April 2026, only a £1 million cap will apply to each individual. This is likely to significantly reduce available relief on the second death. For example, if someone passes away leaving all their assets to their spouse, they will lose their £1m BPR allowance. But if they left £1m of shares to their children and left the rest to their spouse, their spouse would also benefit from an additional £1m BPR allowance.
- Wills Using Trust Structures: Assets passing into discretionary or interest-in-possession trusts will be subject to the cap. Multiple trusts within the same ‘trust group’ are to share the same £1 million relief allocation.
- High-Value Estates: Business owners with estates exceeding £1 million in BPR-qualifying assets will face IHT charges they had not anticipated, even where current wills direct business interests to exempt beneficiaries.
Essential Actions Business Owners Must Take Now
To futureproof your estate planning and mitigate potential tax risks, we recommend the following actions as a matter of urgency:
1. Review and Update Your Will
Engage a solicitor alongside a tax advisor to review your existing will. Ensure your estate planning strategy is optimised for the new £1 million BPR cap. Alexander & Co has a specialist tax team which includes Trust and Estate Practitioners that can assist here. We can work alongside your existing solicitor, or in the event you do not have a solicitor, recommend to best suit your needs.
Key considerations include:
- Dividing business assets between spouses or children;
- Using tailored trust structures to keep control of assets;
- Avoiding over-concentration of BPR assets within one beneficiary’s share.
2. Reassess Asset Valuations
Commission a professional valuation of your business interests. Understanding the current and projected value of qualifying assets is vital to model potential IHT liabilities under the 2026 rules.
3. Utilise the Full Relief Before the Cap Is Introduced
Lifetime transfers involving qualifying business assets before the April 2026 changes can still benefit from 100% BPR. Planning options may include:
- Gifting shares to adult children or into trusts
- Transferring surplus BPR assets out of the estate while full relief applies
Care should be taken to account for the seven-year survival rules for Potentially Exempt Transfers and the interaction with other lifetime gift rules.
4. Plan for Liquidity to Pay Future IHT
Where significant tax liabilities may arise, it is essential to ensure an estate has access to sufficient cash. This could include:
- Life insurance policies written in trust;
- Ringfenced liquid assets; and
- Structured sales agreements or shareholder buybacks.
5. Consider Corporate and Trust-Based Structures
Cross-option agreements, family investment companies, and business trust structures may offer strategic benefits. However, these must be reassessed considering the £1 million BPR cap to ensure they still deliver the intended tax relief.
Business Relief from Inheritance Tax; Long-Term Estate Planning considering BPR Reform
With only a matter of months left before the changes take effect, the window to maximise Business Property Relief under the current rules is narrow. Every business owner should immediately:
- Understand how their estate is impacted
- Review their will and succession plans
- Take informed action before April 2026
Delaying action could lead to unintended tax charges, disrupted succession, and increased administrative complexity for beneficiaries.
Business Relief from Inheritance Tax: How Alexander & Co Can Help
As expert tax advisors and Chartered Accountants, we help business owners across the UK navigate complex inheritance tax legislation. Our specialists provide:
- Estate and inheritance tax reviews
- Will and trust planning in collaboration with legal professionals
- Corporate restructuring advice to protect generational wealth
We recommend booking a consultation with our team as soon as possible to ensure your estate plan is fully aligned with the upcoming Business Property Relief reforms.
Contact Alexander & Co Today
For bespoke estate planning and inheritance tax advice ahead of the 2026 BPR changes, get in touch:
- Call: 0161 832 4841
- Email: info@alexander.co.uk
Alternatively, you can also use our contact form here
Further Reading
- Alexander & Co Inheritance Tax Services
- Business Property Relief Changes – Action to Take Now to Reduce Inheritance Tax
- BADR Changes: What to Expect in 2025 for Business Asset Disposal Relief
- Autumn Budget 2025 Tax Rises Loom
This article was written by Rowan Morrow-McDade, ACA, CTA, TEP Tax Director at Alexander & Co. Rowan is a Chartered Accountant, Chartered Tax Advisor, Trust and Estate Practitioner and a member of the ICAEW. You can view Rowans full profile here.
