Business Property Relief (BPR) is a valuable UK inheritance tax (IHT) relief that allows business owners to pass on certain assets during their lifetime or on death with reduced or no IHT liability.
Introduced in 1976, the relief was designed to help family businesses continue without needing to sell assets to pay inheritance tax. Depending on the type of asset, BPR offers either 100% or 50% relief.
1. Who Qualifies for BPR?
To qualify:
The asset must usually have been owned for at least two years before transfer or death
The business must be trading, not mainly investment-based (e.g., property letting or share trading)
Qualifying assets include:
A trading business or interest in a partnership
Shares in an unlisted trading company (including AIM-listed shares)
Land, buildings or machinery used in a business you own or control
BPR can apply in three common scenarios:
- On death – passing business assets via an estate
- Lifetime transfers – gifting assets or transferring them into trusts during your lifetime
- Trusts – trustees may qualify for relief on periodic and exit charges for settled business property
2. Upcoming Changes – April 2026
The 2024 Autumn Budget introduced significant reforms to Business Property Relief Tax that will take effect from 6 April 2026.
Key changes include:
£1m cap on assets qualifying for 100% BPR (shared with Agricultural Property Relief – APR)
Assets above £1m will qualify for 50% relief, leaving an effective 20% IHT rate
AIM-listed shares will only qualify for 50% relief (regardless of value)
The £1m allowance is per estate (not transferable between spouses/civil partners)
Instalment option extended – IHT on qualifying assets can be paid in 10 equal annual interest-free instalments
The £1m allowance will be index-linked from April 2030
The allowance refreshes every seven years, but is not transferable between spouses
Example – A business worth £3m
First £1m: 100% relief
Remaining £2m: 50% relief → £1m taxable at 20% = £200,000 IHT liability
Transitional Rules for Lifetime Gifts
Before 30 October 2024 – full BPR applies if the donor survives seven years from the date of gift
30 October 2024 – 5 April 2026 – transitional period. If the donor dies on or after 6 April 2026 (and within seven years of gift), new rules apply
3. How to Prepare for the BPR Reforms
With these changes approaching, early planning is essential. Business owners should:
Review your estate plan – assess how much of your business will qualify for BPR
Get a valuation – accurate valuations are crucial, especially for unquoted shares
Restructure ownership – to optimise relief across available allowances
Update wills – to ensure both spouses can utilise their individual £1m allowances
Consider life insurance – to cover potential IHT liabilities
Review trusts – to ensure existing structures remain tax efficient
Evaluate lifetime transfers – before the new rules take effect
4. How Everett King Can Help
The upcoming BPR reforms mean it’s more important than ever to have a clear strategy in place. At Everett King we can:
Review your business and estate plan
Carry out valuations to determine likely IHT exposure
Explore restructuring and planning opportunities
Advise on trusts, wills, and lifetime transfers
Help you safeguard family wealth and succession planning
Next Step: If you own a trading business, AIM-listed shares, or agricultural assets, it’s vital to review your plans now. Contact Everett King today via this link: Everett King Form to discuss how the BPR changes could affect you and how we can help minimise your inheritance tax liability.