Business Property Relief
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April 2026 Inheritance Tax changes – impact on business owners
April 2026 inheritance tax changes slash relief for business owners. Learn how the £1m BPR cap and AIM rule changes could increase IHT and what to do now.
Business Property Relief – Act Now to Reduce Inheritance Tax
Business Property Relief (BPR) is a key inheritance tax (IHT) relief designed to protect family firms, partnerships and entrepreneurial wealth. If your estate includes shares in a trading business or qualifying assets, BPR can reduce your IHT bill by up to 100%. For business owners, directors and investors, understanding how BPR works, and how HMRC applies the rules, is essential to safeguarding company assets for the next generation.
What is Business Property Relief?
Business Property Relief (BPR) reduces the value of qualifying business assets when calculating inheritance tax. In many cases, this means that shares in a private trading company, or an interest in a business, can be passed on free of IHT.
- 100% relief – available on shares in unlisted trading companies, a business or partnership interest.
- 50% relief – available on land, buildings, machinery or assets used in a qualifying business.
This relief can make the difference between a family being able to continue running the business or being forced to sell it to pay a tax bill.
Business owners and directors are urged to review their inheritance plans and business structures before new Business Property Relief rules take effect on 6 April 2026.
What qualifies for Business Property Relief?
To claim BPR, assets normally need to have been owned for at least two years before death or transfer. Typical examples include:
- Shares in an unquoted trading company
- Shares on the Alternative Investment Market (AIM) that meet HMRC conditions
- Interests in a partnership or sole trade business
- Land or buildings used for a qualifying trading business.
Some assets do not qualify, such as investment companies, property letting businesses, and certain furnished holiday lets.
Business Property Relief examples
- A director holding £2m of shares in an unlisted trading company may pass these on with 100% IHT relief.
- A partnership that owns trading premises worth £1m could pass them with 50% IHT relief, provided they are actively used in the business.
Business Property Relief changes and pitfalls
BPR remains one of the most valuable IHT reliefs, but there are conditions and potential risks to be aware of:
- Budget announcements – rules may change in the future, particularly around AIM shares.
- Excepted assets – surplus cash, investments and assets not used in the trade may not qualify.
- Timing – assets must usually be held for two years.
- Business type – investment and property companies do not normally qualify.
Business Property Relief and investments
Some investors use BPR qualifying AIM shares or BPR funds to reduce potential IHT exposure. While these can provide relief after two years, they carry investment risk and should be carefully considered as part of wider estate planning.
How we can help you make the most of Business Property Relief
BPR is one of the most valuable inheritance tax reliefs available to business owners – but also one of the most complex. Our service includes:
- Assessing which of your business assets qualify for relief
- Reviewing shares, partnerships and trading structures against HMRC rules
- Advising on excepted assets such as surplus cash or investments
- Supporting implementation through trusts, gifting or restructuring
- Ongoing reviews to ensure your business continues to meet relief conditions.
We make BPR rules clear, so you can secure valuable tax relief and protect your company’s future.
Why choose us for BPR advice?
- Relief specialists: In-depth knowledge of HMRC rules on BPR qualification
- Risk awareness: Guidance on pitfalls such as AIM shares, excepted assets and timing rules
- Strategic advice: Structuring ownership to maximise reliefs without disrupting operations
- Clear communication: Turning technical legislation into practical steps.
Contact our specialist IHT tax team today to find out how Business Property Relief could protect your business from inheritance tax.
“The team at Chadwicks made us aware of the 2026 changes and acted quickly to secure our relief. Their support has given us real peace of mind.”
Family Business Owner, Altrincham
Business Property Relief – Frequently asked questions
What is Business Property Relief?
Business Property Relief (BPR) is a valuable inheritance tax relief that can reduce or remove IHT on qualifying business assets. Depending on the type of asset, relief may be available at 50% or 100%. This means shares in an unquoted trading company, for example, can often be passed on free of inheritance tax.
BPR was introduced to ensure businesses could continue operating after the owner’s death, without being broken up or sold purely to pay tax.
What qualifies for BPR?
Qualifying assets typically include shares in an unquoted trading company, an interest in a partnership or sole trade, and certain AIM-listed shares. In some cases, land, buildings, or machinery used for trading may qualify for 50% relief.
However, not all businesses are eligible. Investment companies, property letting businesses, and some furnished holiday lets usually do not qualify. It is essential to review ownership structures and trading activity carefully to confirm eligibility.
How long must assets be held?
To qualify for BPR, assets generally must have been owned for at least two years before death or transfer. This rule is designed to prevent short-term acquisitions from being used purely for tax relief.
Selling or restructuring assets too soon can result in the relief being lost. Planning early ensures assets meet the two-year rule, giving families peace of mind that valuable reliefs will be available when they are needed most.
Do furnished holiday lets qualify?
Normally no. HMRC typically classifies furnished holiday lets as investment businesses, which means they are excluded from BPR. Even where holiday lets involve significant management activity, relief is rarely granted.
This area has been subject to challenge in the past, so owners of such properties should not rely on BPR. Alternative planning strategies may be required to reduce inheritance tax exposure on property-based businesses.
Can BPR rules change?
Yes. As with all inheritance tax reliefs, the government may alter the rules in future Budgets. AIM shares, for example, are often highlighted as a potential target for reform.
In addition, HMRC frequently reviews cases to ensure assets genuinely qualify. It is important for business owners to keep arrangements under review, work with professional advisors, and adapt strategies if legislation changes.
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