We have reopened! Changes to Business Property Relief and what it means for Inheritance Tax
We are open again
We hope you have had a peaceful Christmas break. Spall Clark has now reopened and we are taking appointments.
New Year reopening details
Reopening date: 5 January 2026
Telephone hours: 8.30am to 6.00pm
Booking an appointment
If you would like to speak with us, you can book an appointment by email or telephone.
The first week back can be busy. If your query is time-sensitive (for example an urgent Will), please call the office on 01260 769 639.
Unexpected change to Business Property Relief: a significant increase
On 23 December 2025 the government announced there would be a change to Business Property Relief (also known as Business Relief) and related reliefs. From 6 April 2026, the way Business Property Relief (BPR) and Agricultural Property Relief (APR) operate is due to change, with a new cap on the amount that can benefit from 100% relief.
As ever, the right approach is calm and methodical: understand what you own, how it is owned, whether reliefs are likely to apply, and whether your documents still match your intentions.
Important note: This article is general information for England and Wales. It is not legal or tax advice.
Key points at a glance
- The government has unexpectedly announced that the 100% Business Property Relief threshold will be increased from £1 million to £2.5 million, and because it is transferable between spouses or civil partners this can allow up to £5 million of qualifying business and agricultural assets to pass before IHT is due on those assets.
- The remaining changes to BPR are still planned to go ahead from 6 April 2026.
- Many families will not need radical change, but a review is sensible, particularly where business or farming assets are significant.
Business Property Relief: what it is and when it applies
Business Relief (Business Property Relief) can reduce the taxable value of certain business assets when calculating IHT. In straightforward terms, it is designed to help families pass on qualifying businesses without the business being forced into a sale purely to meet an IHT bill.
Presently, Business Relief can apply at 100% or 50%, depending on the type of asset. Executors usually claim it as part of valuing the estate for IHT.
The key point is that relief depends on the facts. Not every company or asset qualifies, and detail matters. For example, there is often a practical distinction between a business that is mainly trading and one that is mainly holding investments.
Changes to Business Property Relief
The government confirmed that, from 6 April 2026, the amount of property eligible for 100% APR and BPR will be subject to a threshold of £1 million, with 50% relief applying above that level.
On 23 December 2025, the government announced that they will be increasing the 100% relief threshold to £2.5 million. The unused allowance can be transferred between spouses or civil partners, meaning up to £5 million of qualifying business and agricultural assets could pass under the 100% threshold across a couple.
This is helpful news for many families. At the same time, it is still a significant change from an uncapped 100% relief position, and it makes forward planning more important for larger estates.
What to review now
A sensible review usually focuses on five areas:
1. What you own and how it is owned
Personal ownership, joint ownership, company shares, partnership interests, and trusts can all affect the IHT outcome.
2. Whether the business is likely to qualify
Relief may depend on the nature of the activity and how assets are used.
3. Documentation that supports the position
Articles of association, shareholder agreements, partnership deeds, management accounts, and evidence of trading activity can be important
4. Other assets
Even where relief is available, estates may face tax on other assets. IHT is charged at a rate of 40% (36% in some cases) above the nil-rate band, subject to reliefs and exemptions.
5. Wills and succession planning
A will that worked well years ago may not align with today’s business structure, family circumstances, or tax rules.
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FAQs
1. What is Business Property Relief and who can claim it?
Business Relief (Business Property Relief) can reduce the value of certain business assets when calculating IHT. It is typically claimed by executors or administrators when valuing an estate, and it may apply at 50% or 100% depending on the asset type.
2. What kinds of businesses typically qualify for Business Property Relief?
HMRC’s overview explains that Business Relief can apply to certain business assets such as unlisted shares, some business property and buildings, and machinery, depending on the circumstances. Eligibility is fact-specific, and the nature of the activity matters, so it is wise to take advice on your particular structure.
3. How do Business Property Relief changes affect my Inheritance Tax planning?
From 6 April 2026, the government plans to introduce a cap so that 100% relief applies up to a £2.5 million threshold, with 50% relief applying above that amount. The allowance can be transferred between spouses or civil partners.
This can change the expected IHT exposure for larger estates and makes it important to review ownership, documentation, and your overall estate.
4. Should I review my estate planning?
It is important to keep your estate plan under review following any major change to your circumstances or Inheritance Tax position. It is important to review your plan to ensure it is still up to date.
5. How do I book an appointment with a solicitor?
You can book by emailing us or by calling the office on 01260 769 639.
Next steps
To book a free initial consultation, please call us on 01260 769 639. We offer appointments at our Congleton office or in your own home. Alternatively, meetings can be carried out online (e.g. via Teams).
