Answers · UK 2025/26
How does Business Property Relief work after the April 2026 changes?
Business Property Relief (BPR) reduces Inheritance Tax on qualifying business assets. From April 2026, BPR and Agricultural Property Relief (APR) share a combined £1m cap: the first £1m of qualifying assets attracts 100% relief; anything above attracts 50% relief (effective IHT rate 20%). Previously there was no cap. AIM shares qualifying under BPR are also affected by the new cap.
Full answer
Business Property Relief (BPR) was covered in detail in a previous answer regarding the pre-April 2026 rules and rates. This answer focuses specifically on how the April 2026 reform changes the practical application of BPR. **What changed from 6 April 2026:** Budget 2024 (Autumn Statement, October 2024) announced that from 6 April 2026, a combined BPR + APR allowance of £1,000,000 per estate applies. This is a fundamental change from the previous regime where there was no cap on the amount of 100% BPR that could be claimed. **The new BPR structure from April 2026:** | Amount of qualifying business property | Relief rate | Effective IHT rate | |---|---|---| | First £1,000,000 (combined BPR + APR) | 100% | 0% | | Above £1,000,000 | 50% | 20% | **Assets within BPR scope:** - Shares in unquoted trading companies (including AIM-listed shares) - A business carried on as a sole trader - A share in a trading partnership - Controlling shareholdings in quoted companies (50% BPR -- unaffected by the £1m cap discussion for planning purposes) - Assets used in a business you control (50% BPR) **AIM shares -- important change:** Previously, individuals could invest unlimited amounts in AIM shares, hold for 2 years, and benefit from 100% BPR. The £1m cap now means that AIM portfolios above £1m lose the full BPR protection -- the first £1m is still protected, but the remainder attracts 50% BPR/20% effective IHT. **Interaction with spouse exemption:** Transfers between spouses at death remain exempt from IHT. BPR and APR reliefs pass between spouses with the transferable nil rate band logic -- the surviving spouse can potentially use a combined £2m of BPR/APR if the deceased's £1m limit was unused. **Planning implications:** Business owners and AIM investors should review wills and succession plans urgently. Life insurance written in trust (to cover the IHT above the cap) and pension planning (pensions are generally outside the estate for IHT) are key tools.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.