What is the difference between 50% and 100% Business Property Relief?

Full answer

Business Property Relief reduces the value of qualifying business assets when working out inheritance tax (IHT), either on death or on lifetime gifts that become chargeable. The relief is given at two rates. The 100% rate applies to a business or interest in a business (such as a sole trade or partnership share) and to unquoted shares, including most AIM-listed holdings under current rules. The 50% rate applies to shares giving you control of a quoted company, and to land, buildings, plant or machinery owned personally but used in a business you control or in a partnership you are a member of. Who it affects: business owners, partners and shareholders, and the executors of their estates. The asset must generally have been owned for at least two years, and the business must be mainly trading rather than mainly holding investments -- property letting and pure investment businesses usually do not qualify. Worked example of the mechanism: if an estate includes GBP 600,000 of qualifying unquoted trading shares attracting 100% relief, the full GBP 600,000 is removed from the IHT calculation. If instead the asset were personally owned business premises qualifying at 50% and worth GBP 600,000, only GBP 300,000 is removed and the remaining GBP 300,000 is added to the estate, where it may be taxed at the 40% IHT rate after the nil-rate band (GBP 325,000) and any residence nil-rate band (GBP 175,000) are applied. 2026/27 note: BPR reform has been announced, so confirm the current qualifying conditions and any caps on gov.uk before relying on it. To estimate the IHT due on the taxable balance after relief, use the inheritance tax calculator.

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