Using Business Property Relief (BPR) to reduce the value of your estate for inheritance tax (IHT)

Business Property Relief (BPR) is one of the most valuable reliefs available for inheritance tax (IHT) purposes. However, the Autumn Budget 2024 introduced significant reforms to BPR that took effect from 6 April 2026, fundamentally changing the planning landscape for business owners, farmers, and investors in AIM-listed shares.

What is Business Property Relief?

BPR is an IHT relief that can reduce the value of qualifying business property in your estate by either 50% or 100%. Prior to April 2026, the relief was available in full regardless of the value of the assets. From April 2026, new limits apply.

The new £1 million combined allowance (from April 2026)

From 6 April 2026, 100% BPR (and Agricultural Property Relief) is subject to a combined allowance of £1 million per person. Business and agricultural property above this threshold will only qualify for 50% relief.

This is a significant change for those with high-value business assets or farms, and early planning is essential to mitigate the impact.

100% relief (subject to the £1m allowance)

100% BPR remains available (up to the £1m combined threshold) on:

• A business or interest in a business (e.g. a sole trade or partnership share)
• Shares in an unquoted company

AIM-listed shares — reduced to 50% from April 2026

Prior to April 2026, shares traded on AIM qualified for 100% BPR, making AIM portfolios a popular IHT planning tool. From 6 April 2026, BPR on AIM-listed shares is restricted to 50% relief only, and importantly this 50% relief does not count against the £1 million allowance. This change significantly affects the attractiveness of AIM portfolios as an IHT planning vehicle and existing portfolios should be reviewed.

50% relief

50% BPR continues to be available on:

• Shares in a quoted company that gave the transferor control of the company
• Land, buildings, or machinery used in a business in which the transferor was a partner or in a company they controlled
• Land, buildings, or machinery held in a trust and used in a business

Qualifying conditions

To qualify for BPR, the property must have been owned for at least two years before the transfer. The business must not consist wholly or mainly of dealing in securities, stocks or shares, land or buildings, or making or holding investments.

The wider IHT picture in 2026/27

The nil-rate band remains frozen at £325,000 and the residence nil-rate band at £175,000 until at least 2030. With rising asset values and the BPR/APR reforms, a growing number of estates will face an IHT liability. Early and proactive planning has never been more important.

How we can help

The April 2026 reforms to BPR and APR represent the most significant changes to IHT planning in a generation. If you own a business, farm, or AIM portfolio, your existing estate plan should be reviewed as a matter of priority.

Get in touch with our team to understand how these changes affect your position and what steps you can take now.