Business Property Relief (BPR)

Last verified: 13 January 2026 (England & Wales)

You spend years building a business, taking risks, reinvesting, and making payroll. Then someone tells you that inheritance tax might force a sale, or dilute what you meant to pass on.

Business Property Relief (BPR) is one of the main reasons that does not always happen. But the rules are technical, and the changes due from 6 April 2026 make planning more important, not less.

Key idea: BPR can reduce inheritance tax on qualifying business assets, but you only get the outcome you expect if your Will, ownership structure, and succession plan all point in the same direction.

Quick-read summary

• BPR (sometimes called “Business Relief”) can reduce inheritance tax on certain business assets by 50% or 100%.
• The business must usually be a genuine trading business (not mainly an investment business).
• A two-year ownership requirement often applies (with some “replacement property” exceptions).
• From 6 April 2026, 100% relief is expected to be limited by a combined APR/BPR allowance, with 50% relief above that allowance (creating an effective 20% inheritance-tax charge on the excess, subject to the rules in force at the time).
• From 6 April 2026, certain “not listed” exchange-traded shares (often discussed in the context of AIM-style planning) are expected to attract 50% relief rather than 100%.
• BPR can be “wasted” by the way gifts are drafted in a Will (for example, where an exemption already applies).
• Planning is rarely just “tax”: you also need to protect the survivor, keep the business stable, and avoid family disputes.

Keeping this useful and safe

This page is general information to help you understand how BPR links into Wills and Will trusts. It is not tax advice, and it is not investment advice.

Where BPR touches investment decisions or specialist tax planning, the normal and sensible route is to involve an FCA authorised financial adviser and, where needed, your accountant.

Joined-up planning is the goal. Your Will plan should match your wider financial plan, so the outcome holds together in real life.

How I work with financial advisers (so your plan is joined up)

I always recommend speaking with a financial adviser where BPR is in play, especially if:

• the business value is material,
• you are considering AIM-style approaches,
• you expect a future sale or buy-out,
• there are second-family dynamics, or
• the 6 April 2026 changes may affect the numbers.

If you already have an adviser, then with your permission I am very comfortable speaking with them so any planning we do is holistic and joined up.

If you do not have an adviser, I work with trusted financial advisers I can introduce you to, with no obligation. You stay in control throughout, and you are free to choose whoever you want.

What BPR actually is

BPR reduces the value of qualifying business assets when inheritance tax is calculated.

In plain terms, it is intended to stop families having to sell a trading business (or give away control) just to raise inheritance tax after a death.

What can qualify (at a high level)

The clean way to think about BPR is “100% relief assets” and “50% relief assets”. The detail depends on the structure and the facts, but typical examples include:

Common 100% relief categories

• A business, or an interest in a business (for example, a sole trader business or a partnership interest).
• Shares in an unlisted company (often private limited companies).

Common 50% relief categories

• Controlling shareholdings in certain listed companies (where the conditions are met).
• Certain business-use assets (for example, land/buildings/machinery) where ownership and use sit in different places (such as personally owned assets used by a business you control), and some trust-held business-use assets.

Trading matters. A company that mainly holds investments (for example, a buy-to-let property investment company) often does not qualify in the way people expect.

The usual conditions people trip over

BPR is not automatic. Common trip points include:

• Business type: the trading versus investment distinction.
• Ownership period: often a two-year holding requirement (with limited exceptions).
• What the company owns: “excepted assets” or surplus assets not needed for the trade can reduce relief.
• A sale in progress: a binding contract for sale can change the analysis.
• Control and voting rights: especially where the business is listed or there are multiple share classes.

If any of those lines make you uneasy, that is usually a sign you should get the business looked at properly rather than assuming the relief will apply.

What is changing from 6 April 2026 (why older pages may now be misleading)

Rules announced for 6 April 2026 introduce a new way of limiting how far 100% relief can go for agricultural and business property.

In practical terms:

• A 100% relief allowance is expected to apply to a combined value of qualifying business and agricultural property (including in certain trust contexts).
• Value above that allowance is expected to receive 50% relief, which can create an effective 20% inheritance-tax charge on the excess value (subject to the final rules in force at the time of death).
• Certain exchange-traded “not listed” shares (often discussed in the context of AIM-style planning) are expected to attract 50% relief rather than 100%.

The headline question is no longer just “Does BPR apply?” but “How much 100% relief is realistically available in this estate, under the rules in force at the time?”

A short note on AIM and ISA wrappers

You may see inheritance-tax planning discussions that reference “AIM portfolios” and sometimes “ISA wrappers”.

Two key points, without going into product detail:

• These are usually conversations about investment selection and risk, not just tax relief.
• An ISA wrapper is about income-tax and capital-gains-tax sheltering. It does not turn an ineligible asset into an eligible one for BPR.

This is exactly where a financial adviser is valuable, because suitability and risk are personal. Then, once the investment approach is agreed, I can help ensure your Will planning is aligned so it still does what you want when the time comes.

How BPR gets “wasted” in Wills (and how to avoid accidental outcomes)

Even where BPR applies, drafting can reduce its usefulness. Three common patterns:

1) Gifts to an exempt beneficiary

If a business asset passes outright to a spouse/civil partner or to charity, inheritance tax is already exempt on that gift. Using BPR there can be a waste, because the relief is not being used to reduce tax on the chargeable part of the estate.

That does not mean “never leave the business to the survivor”. It means you should be deliberate about the trade-off between:

• the survivor’s security and control, and
• keeping relief available for the wider family.

2) Splitting residue between exempt and non-exempt beneficiaries

If the Will splits the whole estate proportionally (for example, part to charity and part to a non-exempt beneficiary), you can end up allocating part of the BPR asset to the exempt share.

A simplified illustration:

• Estate value: £1,000,000
• BPR-qualifying business value: £300,000
• Other assets: £700,000
• Will leaves 50% to charity and 50% to a sibling

Result (simplified):

• Charity share is exempt anyway.
• Only the sibling’s portion of the business attracts BPR, so the other portion is effectively wasted on the charity share.

The fix is not one magic clause. It is careful drafting so that the BPR assets are directed where they actually reduce inheritance tax, while still achieving the family objectives.

3) Leaving BPR assets to the survivor without thinking about the second death

A survivor may later:

• sell the business,
• be bought out by a business partner,
• stop trading, or
• restructure in a way that affects BPR.

If the asset stops qualifying, you can end up with an inheritance-tax-exempt transfer on the first death being replaced by a chargeable asset (often cash) in the survivor’s estate later.

When a “BPR trust” can be part of the answer (and when it is not)

Sometimes a discretionary trust is used in a Will to receive qualifying business assets, with flexibility to support the survivor and then pass value to children later.

This can be relevant where:

• there is real uncertainty about whether the survivor will keep or sell the business,
• there are second-family dynamics,
• the business is intended for one child but fairness is needed across the family, or
• the business partner/shareholder agreement needs a buffer.

However, trusts introduce their own tax regime and administration. The right question is not “Should I use a trust?” but “What problem are we solving, and is a trust the simplest safe tool for that problem?"

The point of a Will trust here is practical. It can be a sensible bridge between “keep the business stable” and “keep options open for the family”, without pretending the trust itself is a tax cure-all.

Quick checklist

You may want a BPR review if:

• your estate includes shares in a trading company, a partnership interest, or a sole trader business
• the business value is material compared to other assets
• you expect the business to be sold at some point (or there is a buy-back / cross-option arrangement)
• you have a second marriage, step-children, or unequal intentions between children
• you have heard friends mention AIM-style inheritance-tax planning and want to understand how it links to your Will
• your current Will leaves “everything to my spouse” without any business-specific logic

What to consider (before anyone drafts anything)

• Who must be protected first: the survivor, the business, or the children (often it is all three, but the order matters).
• Who should control the business after death: and what the shareholder or partnership documents actually say.
• Liquidity: if relief is reduced or capped, where would any tax be paid from without destabilising the business?
• Timing: what changes are due from 6 April 2026, and do you need a plan well in advance of that date?
• Fairness: how to balance a “business child” and a “non-business child” without creating a dispute.
• Risk: AIM-style planning can carry investment risk. Tax relief does not remove market risk.
• Joined-up advice: accountant, corporate solicitor (if needed), financial adviser (if needed), and the Will all have to align.

Cases

A family engineering firm with two children, only one in the business

Dad wants the child in the business to take over, but also wants the other child to be treated fairly. With a clear succession plan and Will drafting that matches the share structure, the business can continue without forcing a rushed sale. Without that alignment, the family risks either deadlock or a forced buy-out at the worst time.

A couple where the first death leaves everything to the survivor

On the first death, the spouse exemption means no inheritance tax. The risk appears later, if the survivor sells the business and holds cash, or if BPR rules tighten further. A structured plan can preserve flexibility and reduce the chance of an avoidable tax shock on the second death.

A shareholder with a business partner and a buy-back agreement

The paperwork says the partner can buy the shares back. The family assumes they will keep the shares. A coordinated plan (Will plus the business documents) prevents the family being surprised by an automatic route to sale and helps manage how proceeds are protected and distributed.

A property-heavy company mistaken for a “trading business”

The owner assumes “it’s a company, so BPR applies.” In reality, investment activity can disqualify relief. With early clarification, the owner can plan based on real numbers. Without it, the family may discover the problem only after death, when options are limited.

A portfolio built around AIM-style inheritance-tax planning

The family expects 100% relief after two years. The planned shift to 50% relief for certain shares changes the maths, and market volatility remains. A sensible plan involves a financial adviser for investment suitability, then aligns the Will so the estate plan still does what the family intends.

Does BPR apply automatically if I own a limited company?

No. Relief depends on whether it is a qualifying business and whether the relevant conditions are met (including the trading versus investment point).

Do I have to own the business or shares for two years?

Often, yes. There are exceptions (for example where qualifying business property replaces other qualifying business property), but the two-year point is a common trip hazard.

What about AIM and ISA wrappers?

AIM-style planning is often discussed in the investment world because some shares traded on certain markets have historically been treated as eligible for BPR after the holding period. From 6 April 2026, the planned reforms are expected to reduce the relief for certain “not listed” exchange-traded shares to 50% (subject to the final rules in force at the time).

An ISA wrapper is about income-tax and capital-gains-tax sheltering. It does not create BPR eligibility where it does not already exist.

If you are considering any investment route, an FCA authorised financial adviser should review suitability and risk. Then I can ensure your Will planning is aligned.

Is leaving the business to my spouse always the best answer?

Not always. It can be right for security and simplicity, but it can also waste relief and create second-death risk if the asset stops qualifying later. This is a planning decision, not a template rule.

Should I use a discretionary trust for BPR?

Sometimes it helps, especially where you need flexibility and protection between first and second death. But trusts have their own tax and admin regime, so it should be used only where it solves a specific problem better than simpler routes.

If some inheritance tax is due, can it be paid in instalments?

In some scenarios, yes. The rules are technical and can change, so it should be checked as part of the wider succession plan rather than assumed.

Optional technical note

BPR sits within the inheritance tax framework and is heavily fact-dependent. The practical takeaway is that headline relief rates are not enough; the business type, ownership, documentation, and what happens after death all affect the outcome.

Next steps

1. List what the business assets actually are (shares, partnership interest, sole trader business, business-use property, cash in the company).
2. Confirm how the business is structured and who controls it (share classes, voting rights, partnership agreement).
3. Decide the real-world outcome you want (who controls, who benefits, what happens if the business is sold).
4. Bring your accountant and, where appropriate, a financial adviser into the loop. With your permission I am comfortable speaking to them so the plan is joined up.
5. Then align the Will and any Will trust drafting so it supports the plan rather than accidentally cutting across it.