Business Property Relief changes
Business Property Relief changes
what family businesses, small businesses and farmers need to know
What is Business Property Relief (BPR) & Agricultural Property Relief (APR)?
BPR and APR are tax reliefs designed to reduce or eliminate Inheritance Tax (IHT) on qualifying business and agricultural assets. BPR typically covers trading businesses (or shares in them) while APR covers agricultural property such as farmland, farmhouses and certain land and buildings. The reliefs can apply during life (gifts) or on death.
Under current rules:
Assets meeting certain criteria may get 100% relief, meaning no IHT on those assets.
Others get 50% relief, depending on the nature of the asset and how it’s used.
These reliefs help family-owned businesses, farms and small firms pass on assets without a large tax charge.
What’s changing from 6 April 2026?
From 6 April 2026, the Government will introduce significant reforms to how Business Property Relief (BPR) and Agricultural Property Relief (APR) are applied. These changes are designed to modernise the rules and bring more consistency between the two reliefs.
Here’s a summary of the main updates, drawn from the official GOV.UK announcement:
**1. A new £1 million combined allowance for full relief
**
Under the new system, each individual will have a £1 million allowance covering the combined value of assets qualifying for Agricultural and Business Property Relief.
The first £1 million of eligible business and agricultural assets will continue to receive 100% Inheritance Tax relief.
Any value above £1 million will still attract relief, but at a reduced rate of 50%.
This allowance applies to both lifetime transfers and estates on death. It was announced in the chancellors Autumn Budget 2025, that the allowance can be transferred between spouses and civil partners. Each trust will also have its own £1 million allowance for relevant property charges.
**2. Reduced relief for certain company shares
**
From April 2026, shares in some companies listed on recognised stock exchanges, including the Alternative Investment Market (AIM), will only qualify for 50% relief instead of the current 100%. These shares won’t count towards the new £1 million allowance.
**3. Anti-forestalling measures
**
To prevent early transfers being made simply to benefit from current rules, any lifetime transfers made on or after 30 October 2024, where the donor dies on or after 6 April 2026, will fall under the new regime.
**4. Future indexing
**
The new £1 million allowance will be reviewed and adjusted in line with inflation (CPI) from April 2030, ensuring it retains its real value over time.
**5. Limited impact on most estates
**
According to GOV.UK, the majority of estates claiming APR or BPR will remain unaffected by the cap — but around 2,000 estates a year are expected to see an increase in their Inheritance Tax bill.
Who is most impacted?
Family businesses: Especially those that have built up substantial non-trading assets, or hold property, land, or diversified assets within their business structure. The combined cap could affect how much qualifies for 100% relief.
Small and medium-sized enterprises (SMEs): Business owners planning succession of trading companies need to revisit whether their assets and shares qualify fully under the new regime.
Farming businesses: Farms with a mix of agricultural land, farmhouses, cottages, rental property, or diversification (glamping, holiday lets, solar) could find parts of their estate no longer fully qualifying for 100% relief. The combined cap and changed rules will be especially relevant.
What this means in practice - simple examples
If a family farm currently has £800,000 of qualifying agricultural property - under the new rules the full £800,000 would still get 100% relief (under the £1 million allowance) so no change.
If instead the farm + business held £1.5 million of qualifying assets: £1 million gets 100% relief, £500,000 gets 50% relief - meaning effectively £250,000 could be subject to IHT (based on 50% relief) plus nil-rate band etc.
If a business owner holds shares in an unquoted trading company valued at £3 million: £1 million at 100% relief, £2 million at 50% relief → meaning increased IHT exposure vs current unlimited 100% relief.
How to act now - planning ahead
Since the changes take effect in April 2026, now is the time to act to review your position. Key steps include:
Review your asset structure: What in your business or farm qualifies as “trading” vs “investment”, and how much value sits in qualifying assets?
Consider valuations: Determine the current value of business assets, shares, land, buildings, etc so you know the potential exposure.
Evaluate lifetime transfers/gifts: There may be benefits in transferring qualifying assets earlier, although care is needed (donor needs to survive 7 years etc).
Work with your adviser early: A specialist in business & farming IHT planning (such as us) can help you understand the implications and implement the right strategies.
How PJE can support you
At PJE Accountants and Advisors, as a third-generation family firm serving both farming clients and owner-managed businesses, we appreciate the nuances of succession planning and tax reliefs like BPR and APR.
Our team can help you:
Assess whether your business or farm assets will still qualify under the new rules.
Model the impact of the £1 million allowance and 50% relief on excess.
Structure your business ownership, wills and gifts with these changes in mind.
Provide digital bookkeeping and advisory support with tools like Xero and Dext so asset values and accounting are clear and up-to-date.
Whether you are a small trading company, a multi-asset farming business, or a family business with property and investment holdings, we’re here to help you plan ahead.
📞 Contact us today for a free review of how the April 2026 BPR/APR changes may affect you, or explore more on our agri and business advisory services.
Posted - 12 November 2025