Business Property Relief changes explained

What is Business Property Relief (BPR)?

Business Property Relief (BPR) is a tax relief which can reduce the value of gifts of business property for the purposes of inheritance tax. It applies to business property which passes on death, as well as to gifts made during an individual’s lifetime.

To qualify for Business Property Relief, the property involved must be qualifying business property, and the business itself must wholly or mainly trading in nature. Currently, Business Property Relief is available on an interest in a business which is held by a sole trader, a partner or shareholder in a private trading company or holding company of a trading group.

Under the current rules, the reduction in the property’s value for inheritance tax purposes provided by Business Property Relief is either 100% or 50%. The amount of relief available depends on factors such as the type of asset and how long it has been held.

What Business Property Relief changes are coming up?

In the 2024 Budget, it was announced that the tax relief available to business owners through Business Property Relief would be capped from April 2026 onwards. Initially, the cap for the relief was set at £1m, with 50% relief to apply on the value of the asset above this threshold.

However, in December 2025 it was announced that the planned cap would be amended to £2.5m. This cap will be aggregated between Business Property Relief and Agricultural Property Relief (APR) where both reliefs are applicable.

Above this revised £2.5m Business Property Relief allowance, relief will be available at 50% on qualifying assets.

The £2.5 million allowance will be available per person and will be transferrable to a surviving spouse or civil partner on death. This means that married couples and civil partners will be able to pass on up to £5m of agricultural or business assets between them in addition to existing allowances, such as the nil-rate band (the threshold below which an estate pays no inheritance tax, currently set at £325,000).

There will also be changes to the rate of Business Property Relief payable on shares for inheritance tax purposes. Under the new rules, shares which are listed on AIM (the Alternative Investment Market) or not listed on a recognised stock exchange will be subject to 50% Business Property Relief – reduced from 100%. In other instances where relief previously was available at 50%, business property relief at this level will continue.

What should business owners do about the changes to Business Property Relief?

With the changes to inheritance tax coming up in April 2026, business owners need to make sure they’re following the right personal tax planning strategy in response.

As experts in tax planning, our team work with clients to review their assets and advise on the potential inheritance tax implications for their estate.

The changes to inheritance tax and Business Property Relief could have implications for business owners’ estate planning and succession planning, and we are here to advise on options for planning measures in response to this.

If you’re looking for advice on inheritance tax, we’re here to help

At Prime Accountants Group, our tax experts are here to advise on Business Property Relief changes and what they could mean for your estate.