During the Autumn Budget announcement on 30th October, the Chancellor announced changes to Inheritance Tax reliefs and pensions, the impact of which will be felt in the upcoming years. In this article, our private client team explore the changes to Business Property Relief and pensions and explain what that could mean for you and your finances.
What is Business Property Relief?
Business Property Relief (BPR) is a valuable Inheritance Tax relief for business owners and, depending on the circumstances, can provide 50% or 100% relief on some of an estate’s business assets.
What qualifies for Business Property Relief under the current rules?
You can claim 100% BPR for assets such as shares in unquoted trading companies, an interest in a business (like a partnership share) or shares listed on an alternative stock exchange, such as the Alternative Investment Market (AIM).
You can get 50% BPR on assets such as land, buildings and equipment used in a business but owned personally by the business owner.
Assets need to be owned for two years before BPR can be claimed.
What changes are being made to Business Property Relief?
From April 2026, BPR will be subject to a £1 million allowance. Any value above this allowance will only receive BPR at 50%. This allowance is also shared with any assets you own which qualify for Agricultural Property Relief (APR). To find out more about APR, read our recent article where we discuss the changes to APR announced in the Autumn Budget.
In addition, BPR will reduce from 100% to 50% for shares that are designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.
The government claims the majority of estates claiming BPR in 2026/27 will not be affected by these changes, yet the increase in potential tax liabilities for those affected could be very significant.
The changes will also affect individuals making lifetime gifts of assets to other individuals and into trusts, as well as individuals leaving assets in their estates on death.
The announcements made around BPR during the budget are currently still proposals, not law, and while it may be beneficial to start planning for the impact of these changes, it is important to remember that they are not yet set in stone.
However, the proposed new rules will apply for lifetime transfers made on or after 30th October 2024 if a donor dies on or after 6th April 2026, meaning it is not as easy as giving away assets before the changes officially come into effect. A transfer that is made now could be affected by the changed BPR/APR rules.
Prepare for potential changes to your finances
If you think you may be affected by the proposed changes to Business Property Relief or Agricultural Property Relief, get in touch with our private client team to see how we can help.
