Answers · UK 2025/26
What is UK Business Relief for Inheritance Tax?
Business Relief (BR) gives 100% IHT relief on shares in unquoted trading companies (AIM stocks), sole-trader business assets and partnership interests, provided they've been held for 2+ years. From April 2026, BR is capped at £1m at 100%; excess at 50% (effective 20% rate).
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UK Inheritance Tax Business Relief 2025/26 — and significant April 2026 changes. Pre-April 2026 rules: 100% BR on (a) sole-trader business; (b) partnership interest; (c) unlisted company shares (AIM-listed counts as unlisted); (d) certain trust property used by a beneficiary in business. 50% BR on (a) controlling shareholdings (50%+) in listed companies; (b) land/buildings/plant in your own company. Conditions: hold for 2+ years before death (or replace within 2 years if "trading" continues); business must be trading (not investment-only — property letting EXCLUDED, AIM trading companies INCLUDED). October 2024 Budget changes (effective 6 April 2026): combined cap of £1m on 100% BR + Agricultural Property Relief (APR) per person. Above £1m, 100% relief drops to 50% (effective 20% IHT rate vs 0%). Cap is not transferable between spouses. This affects: family business owners with companies worth more than £1m; large farms (APR); AIM investors using BR as IHT planning. Strategic responses: gift business interests during lifetime (7-year rule); life insurance to cover IHT liability; review wills to use multiple thresholds (NRB + RNRB + £1m BR cap = up to £1,500,000 IHT-free for a single person). Consult specialist before April 2026 — significant planning opportunities.
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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.