Key takeaways
- Business Property Relief (BPR) reduces the value of qualifying business assets for Inheritance Tax at 100% or 50%.
- From 6 April 2026, 100% relief applies to the first £2.5 million of combined business and agricultural property; relief above that is 50%.
- Unused allowance can be transferred to a surviving spouse or civil partner, so a couple can pass on up to £5 million with full relief.
- Shares on AIM and similar markets get 50% relief in all cases.
- Tax on assets qualifying for relief can be paid in 10 annual interest-free instalments.
Business Property Relief (BPR), also called Business Relief, lets owners pass on trading businesses and shares in unquoted trading companies with little or no Inheritance Tax (IHT). It was significantly reformed from 6 April 2026, with full relief now capped, but the cap was set much higher than first proposed.
What changed in April 2026
| Before 6 April 2026 | From 6 April 2026 | |
|---|---|---|
| Unquoted trading company shares, businesses, partnership interests | 100% relief, no limit | 100% on the first £2.5 million (shared with agricultural property relief), 50% above |
| Shares on AIM and other “not listed” markets | 100% relief | 50% relief |
| Land, buildings or machinery used by a company you control or a partnership | 50% relief | 50% relief |
| Unused allowance on death | Not applicable | Transferable to a surviving spouse or civil partner |
| Paying the tax | Instalments for some assets | 10 equal annual interest-free instalments for all APR and BPR property |
The original proposal, announced in October 2024, was a £1 million allowance. Before the changes took effect, the government raised it to £2.5 million, transferable between spouses and civil partners, with the same allowance applying to property in trusts.
What qualifies for BPR
| Asset | Relief rate (within the allowance) |
|---|---|
| A business or an interest in a business, such as a sole trade or partnership share | 100% |
| Shares in an unlisted trading company, including AIM shares | 100% for unlisted; 50% for AIM |
| Securities in an unlisted company that, with shares, gave you control | 100% |
| Shares in a listed company you control | 50% |
| Land, buildings or machinery owned by you and used by your company or partnership | 50% |
Conditions
- The assets must have been owned for at least two years before death or the gift.
- The business must be trading. Businesses mainly dealing in securities, land or investments (including most property letting) do not qualify.
- Assets not used in the business, such as surplus cash or investments held by a company, can be excluded.
- A business subject to a binding contract for sale at death does not qualify.
How the £2.5 million allowance works
The allowance covers the combined value of property qualifying for 100% BPR and 100% agricultural property relief. Above it, relief is 50%, giving an effective IHT rate of 20% on the excess.
Example
Daniel dies in 2026/27 owning shares in his family’s trading company worth £4 million. He leaves them to his children. His wife died in 2024 and her allowance was unused.
| Amount | |
|---|---|
| Value of shares | £4,000,000 |
| Daniel’s allowance | £2,500,000 |
| Transferred allowance from his wife | £2,500,000 |
| Total 100% allowance | £5,000,000 |
| Value relieved at 100% | £4,000,000 |
| IHT on the shares | £0 |
If Daniel had no allowance to inherit, £1.5 million would get 50% relief, leaving £750,000 taxable, costing up to £300,000 at 40%, payable over 10 years interest-free.
Paying IHT on business property
Where IHT is due on business or agricultural property, it can be paid in 10 equal annual instalments, interest-free, starting six months after the end of the month of death. If the asset is sold, the outstanding tax becomes payable.
Lifetime gifts of business property
- A gift of qualifying business property is a potentially exempt transfer. If the donor dies within seven years, BPR is only available if the recipient still owns the property (or replacement property) and it still qualifies.
- Gifts of shares can also be eligible for CGT gift holdover relief; see gift holdover relief.
Planning points
- Review company balance sheets for excess cash or investments, which can restrict relief.
- Make sure wills use both spouses’ £2.5 million allowances, now that they are transferable.
- Consider the timing of a sale: once a binding contract exists, BPR is lost.
- See also agricultural property relief and IHT planning strategies.
Frequently asked questions
What is the Business Property Relief limit from April 2026?
100% relief applies to the first £2.5 million of combined business and agricultural property per person, with 50% relief above that.
Can my spouse use my unused BPR allowance?
Yes. Any unused part of the £2.5 million allowance can be transferred to a surviving spouse or civil partner.
Do AIM shares still qualify for Business Property Relief?
Yes, but at 50% rather than 100% from 6 April 2026.
How long must I own a business for BPR?
At least two years before death or the gift, and the business must be trading rather than mainly holding investments.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.