Business Property Relief (BPR) has long been a cornerstone of smart succession planning. But with the clock ticking down to 6 April 2026, the rules are changing – and fast.
If you’re a business owner, now’s the time to get ahead of the curve, and you won’t be the only one. Just last week, Sir Michael Eavis, the 89-year-old owner of Glastonbury festival, hit the headlines as he reportedly transferred most of his financial interests to his daughter and a family trust, potentially saving nearly £80m in inheritance tax (IHT).
So, with this year’s Glastonbury done and dusted – and the BPR changes still centre stage – read on to find out why Eavis made these changes, and how you can follow suit.
What Is Business Property Relief?
Business Property Relief reduces the value of “relevant business property” when calculating IHT. Under the current rules, relief is provided at 100% or 50%, depending on the asset.
What’s Changing With Business Property Relief?
Currently, BPR provides unlimited 100% relief from IHT for owners of trading businesses and unlisted trading company shares, provided the qualifying conditions are met. A number of changes to how the relief applies are coming in from 6 April 2026. 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
– And is not transferable between spouses or civil partners
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 pre 30 October 2024 are understood to have a separate £1 million allowance
Interest-free instalments for IHT
– The liability which attaches to qualifying BPR assets can be paid in equal, interest-free annual instalments over ten years
What Does This Mean For You?
The impact of the BPR changes will vary depending on the value of your business, but it could be significant.
Below are examples of the additional inheritance tax charge that could arise in relation to a business interest, for example, shares in a trading company:
| Share value | Potential increase in IHT |
| £3,000,000 | £400,000 |
| £5,000,000 | £800,000 |
| £10,000,000 | £1,800,000 |
| £20,000,000 | £3,800,000 |
| £50,000,000 | £9,800,000 |
There will be an impact on Trusts too, and with the proposal that pensions will become chargeable to inheritance tax on 6 April 2027, the landscape is shifting quite dramatically.
The numbers above are, of course, illustrative, just to give you an idea of the possible impact. However, the points to take away are that the amounts involved could be significant, and if you want to mitigate the impact of the changes, there is time to plan. Planning should be considered sooner rather than later, or opportunities may be missed.
What Should You Be Thinking About?
If you’re a business owner, start considering your succession plan now, before the rules change:
Review your current position:
Consider the value of your business assets and check that they qualify for business property relief – don’t assume that the relief will be available.
Quantify your exposure to inheritance tax:
By establishing how the new rules will apply to your estate, based on your existing plans and wills.
How will the inheritance tax be funded by your beneficiaries?
Understand and consider the funding options, including any tax liabilities that may arise to implement them, so that a clear plan is in place to support your beneficiaries.
Consider your succession plan and how a lifetime gifting strategy fits within this:
The increased exposure may lead you to accelerate your succession plans. In these circumstances, trusts can play a part in allowing you to retain a level of control and protection, whilst removing value from your estate.
Look to make gifts now, either outright or into a trust:
This may be of current or future value to cap the exposure increasing.
Is there a sale on the horizon?
If you are thinking of selling your business interest pre 6 April 2025, or within the next five years, there is planning that you should consider now.
Review your Will:
This may need updating to ensure the best position is achieved.
Review all existing trusts:
Understand the impact of the new rules on trusts that are holding business interests and consider the options available.
The Advantages Of Lifetime Gifting
Set the seven-year clock ticking:
A gift to an individual or a trust remains in the estate of the transferor for seven years. The sooner the seven-year clock starts ticking, the more likely the gift will be fully effective in reducing your IHT exposure. A tapered tax rate is also available, provided the transferor survives three years from the date of the gift.
Maximise 100% relief:
Every individual has a £1 million allowance available. Splitting the ownership of family companies across a number of family members will reduce the overall IHT exposure for the family. Individuals can also settle business assets into a trust, which will have its own £1 million allowance.
The power of minority discounts:
Non-controlling shareholdings are worth less per share than controlling ones. An appropriate discount, to reflect the limited control and influence on the company that a minority shareholding provides, would be applied to the valuation of such shareholdings for IHT. Providing a further benefit of dividing shares across several shareholders.
Retain control by using trusts:
If you’re not ready to give up control of your business, you could consider transferring a share into trust. Provided you are excluded as a beneficiary, this results in a shift of value from your estate to the trust, but by appointing yourself as one of the trustees, you will have legal responsibility and control over the trust and its assets.
Not ready to give away capital, consider freezing your value:
A cap could be set on the value of your shares, so that they do not continue to grow in value. In tandem, shares in the company would be acquired by the younger generation, or a trust, into which the future growth in value will automatically accrue without the need for gifting at a later date. A very clever option for securing future IHT savings without the seven-year rule coming into play, but one that requires specialised advice and planning.
How Can We Help?
At Cooper Parry, we have specialist teams that can help ensure the right approach is taken at every step. From understanding how much you can afford to give away and reviewing the availability of tax reliefs to valuing your shares and implementing the legal paperwork, we can provide a holistic full service, project managed by a dedicated member of our team.
We can inform and guide you on what your options are, helping you to evaluate the pros and cons, so that you can make informed decisions, taking all things into account, not just tax.
With only 9 months left, time is ticking. So, don’t hesitate to get in touch with our Private Client Team to discuss how we can help you.
