BUSINESS PROPERTY RELIEF 2026: IHT CHANGES, GUIDANCE & PLANNING

BPR is a valuable Inheritance Tax (IHT) relief that reduces the taxable value of “relevant business property”. It’s long been a cornerstone of smart succession planning, because under the current rules, relief is provided at 100% or 50%, depending on the asset.

Currently, BPR provides unlimited 100% relief from IHT for owners of trading businesses and unlisted trading company shares, provided the qualifying conditions are met. But the headline changes include:

• £1 million allowance: 100% relief will be capped at £1 million on a combined value of qualifying business and agricultural property
• 50% relief above £1 million: Any value above £1 million will receive relief at 50% (i.e., an effective IHT rate of 20%)
• The £1 million allowance refreshes every seven years.
• As announced in the Autumn Budget 2025, any unused allowance on death can transfer to the surviving spouse.
• Property settled into trust: Where an individual settles property into more than one trust on or after 30 October 2024, there will be a single £1 million allowance, with rules applicable to how that allowance is split between the trusts. Trusts that were in existence before 30 October 2024 are understood to have a separate £1 million allowance.

The changes could significantly increase IHT liabilities. For example:

• A £3 million business interest could face an additional £400,000 in IHT
• A £10 million interest could see a £1.8 million increase
• At £50 million, the extra tax could reach £9.8 million

These figures are illustrative, but they highlight the scale of impact for high-value estates and why planning early is so important to help mitigate this.

Yes. Qualifying BPR assets can be paid for in equal, interest-free instalments over ten years, easing the financial burden on beneficiaries.

Lifetime gifting can be a powerful tool for reducing your Inheritance Tax (IHT) exposure especially ahead of the 2026 BPR changes. Here’s why:

• Start the seven-year clock: Gifts fall outside your estate after seven years, so acting early maximises the chance of full IHT relief.
• Maximise the £1m BPR allowance: Gifting business assets to multiple family members or trusts can spread the relief and reduce overall exposure.
• Unlock minority discounts: Splitting shares can reduce their taxable value, as minority holdings are typically worth less for IHT purposes.
• Retain control via trusts: You can gift into a trust (excluding yourself as a beneficiary) while still acting as a trustee—keeping control without inflating your estate.
• Freeze your estate’s value: By capping your share value and passing future growth to others, you can limit IHT without triggering the seven-year rule.

Our Private Client Tax team offers holistic support – from valuing your business and reviewing reliefs to implementing gifting strategies and managing legal paperwork. We’ll help you plan smart, act early, and stay ahead of the changes.