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From 6 April 2026, Business Property Relief changes significantly. The first £2.5m of combined BPR and APR qualifying assets still attracts 100% relief, but anything above that threshold is only 50% relieved — meaning 40% IHT applies to half the excess value.
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These changes were confirmed in the Autumn 2024 Budget and take effect from 6 April 2026. If your estate includes substantial business or farming assets, acting before the deadline could make a meaningful difference to your IHT bill.
See also: APR changes April 2026 and AIM shares IHT relief changes.
Business Property Relief is an inheritance tax relief that reduces — or eliminates — the value of qualifying business assets when calculating IHT. Introduced in 1976 and now governed by the Inheritance Tax Act 1984, BPR was designed to allow family businesses to pass from one generation to the next without a forced sale to pay tax.
Under the rules that applied until 5 April 2026, qualifying business assets attracted either 100% or 50% relief, with no cap on the total value that could qualify for 100% relief. This meant a business worth £10m could pass entirely free of IHT if it met the qualifying conditions.
That changes from 6 April 2026, when a new £2.5m cap takes effect. The change applies to both BPR and Agricultural Property Relief (APR), with the cap applying to the combined total across both reliefs.
From 6 April 2026, the first £2.5m of combined BPR and APR qualifying assets per person still attracts 100% relief — meaning no IHT on those assets. However, any qualifying assets above the £2.5m threshold will only receive 50% relief, meaning the remaining 50% is included in the taxable estate and taxed at 40%.
In practice, assets above the £2.5m BPR/APR threshold that would previously have attracted 100% relief will now face an effective IHT rate of 20% (50% of the 40% rate) on the excess value.
Example: Business owner dying after 5 April 2026
The additional IHT in this example is £300,000 compared with the old rules.
The qualifying conditions for BPR have not changed — what has changed is the amount of relief available above £2.5m. To qualify, business property must generally:
Assets that attract 100% BPR (subject to the new cap) include sole trader businesses, partnership interests, and unquoted company shares. Assets attracting 50% BPR include controlling shareholdings in quoted companies and certain land/buildings used in a business.
AIM shares have historically qualified for 100% BPR, making them a popular IHT planning tool — particularly for investors who held qualifying AIM portfolios for two years or more. From April 2026, AIM shares are no longer eligible for 100% BPR. Instead they attract 50% relief, subject to the £2.5m combined cap.
This is a fundamental change for the AIM IHT planning market. Investors who built AIM portfolios primarily to mitigate IHT will need to review whether the strategy remains cost-effective. See our full guide to AIM shares and IHT relief changes for more detail.
If your estate includes both business property and agricultural property (farmland, farm buildings), the £2.5m cap applies to the combined total across both BPR and APR. You cannot claim £2.5m of BPR and a further £2.5m of APR — the allowance is shared.
For farming families with mixed business and agricultural assets, this makes the interaction between the two reliefs especially important to plan carefully. Read our guide to APR changes from April 2026 for the full picture.
Gifting qualifying business property before death starts the 7-year clock running. If the donor survives 7 years, the gift falls outside the estate entirely, regardless of BPR. This can be particularly effective for business owners who want to pass shares or business interests to the next generation.
However, gifts of business property may trigger capital gains tax on the gain in value — so this needs careful analysis alongside any IHT saving.
Transferring business assets into trust is more complex after the 2026 changes. Discretionary trusts are subject to a 10-year periodic charge and exit charges, and BPR can apply to assets held in trust — subject to the qualifying conditions. See our guide to IHT on discretionary trusts.
Assets passing to a spouse or civil partner are exempt from IHT regardless of their value, and spouses have their own separate £2.5m BPR/APR cap. This means a married couple can potentially pass up to £5m of qualifying business or agricultural assets at 100% relief (£2.5m each), provided the assets pass through properly — including making use of the transferable nil-rate band.
Some business owners will want to restructure their business or shareholdings before April 2026 to ensure the most valuable qualifying assets are positioned to use the cap efficiently. This might include:
BPR has always been subject to anti-avoidance rules, and these remain in place. Key points to be aware of:
For business owners with estates likely to exceed £2.5m in qualifying assets, the April 2026 changes make early succession planning more important than ever. The key actions to consider are:
APR changes from April 2026 cap full relief at £2.5m combined with BPR. Essential reading for farmers, landowners, and rural estate planners.
AIM shares lose 100% BPR from April 2026, dropping to 50% relief. What it means for AIM IHT portfolios, existing holdings, and alternatives to consider.
From April 2027, unspent pension funds fall into your taxable estate. Worked examples show the impact and the planning steps that can still reduce the bill.
The non-dom IHT regime changes from April 2025. The new 10-year resident rule means long-term UK residents face IHT on worldwide assets. What you need to know.
IHT nil-rate bands are frozen at £325,000 and £175,000 until April 2030. As house prices rise, many more estates will pay inheritance tax. Numbers, impact, and planning steps.
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