What is Business Property Relief and Who Does it Benefit?

Business Property Relief (BPR) is an Inheritance Tax (IHT) relief designed to reduce the value of gifts of Relevant Business Property (RBP) made during a person’s lifetime or on death. Relief is given at either 100% or 50% depending on the type of asset, the value and date of transfer. This primarily benefits business owners, stakeholders, and investors.

It is a relief that has been reformed recently so the below is relevant for transfers of qualifying assets on or after 6 April 2026.

How does Business Property Relief work?

For people likely to leave behind a significant estate (and associated IHT bill), business property relief reduces or eliminates IHT liabilities on certain qualifying business assets.

BPR helps ensure that family businesses do not have to be sold or broken up to pay IHT upon the death of the owner, that may have been the case if there was insufficient free cash in the estate to cover the IHT liability.

What Qualifies for Business Property Relief?

Not every investment or interest in a business will qualify for Business Property Relief. In order to qualify, the asset/shares must have been owned for at least two years before death or transfer. The business must be a trading business, not mainly investing.

100% relief applies only to the following assets that have a value of under £2.5m:

• Sole trader businesses
• A business or interest in partnerships or LLPs
• Shares in an unlisted company

50% relief applies to:

• Any combined BPR or Agricultural Property Relief (APR) qualifying value exceeding £2.5 million.
• Land, buildings and machinery used wholly or mainly in a business controlled by the transferor, or in a partnership of which they are a member.
• Shares listed on the Alternative Investment Market (AIM) will qualify for 50% BPR regardless of value.
• Shares or securities that give the taxpayer control of a quoted company.

Who does Business Property Relief Benefit?

Business Property Relief benefits mainly owners of unlisted/private trading companies, partnerships, or sole traders looking to pass on their business to heirs without heavy IHT liabilities. Those who primarily benefit include but are not limited to:

• Family Business Owners/owner managed businesses: those looking to pass on unincorporated businesses or shares in unlisted trading companies.
• Owners of Trading Companies: specifically, those operating trading companies rather than investment companies (property investment businesses generally do not qualify).
• Investors in AIM-listed Shares: investors who hold shares in companies listed on the Alternative Investment Market for at least two years
• Owners of Specific Business Assets: individuals who own land, buildings, or machinery used in a business they control or in which they are a partner.

Recent changes mean it's very important to build a solid understanding of your potential IHT position. This can greatly enhance the value of being proactive with IHT planning.

For more information, contact us today.