Business Property Relief (BPR)

Key facts

BPR provides 100% relief on unquoted trading company shares and sole trader/partnership businesses.
BPR provides 50% relief on controlling holdings of quoted shares, and land/buildings used in a qualifying business.
The business must be a trading business — mainly investment businesses do not qualify.
The asset must have been owned for at least 2 years before the transfer.
From April 2026: 100% BPR is capped at £1 million; assets above £1m receive 50% relief.

What Is Business Property Relief?

Business Property Relief (BPR) reduces the value of qualifying business assets that are transferred for IHT purposes. It can reduce the value by 50% or 100%, depending on the type of asset. BPR is one of the most valuable IHT reliefs — potentially eliminating the tax on business assets entirely.^[1]

BPR Rates

Asset Type	Relief Rate
A sole trader business or interest in a partnership	100%
Shares in an unquoted trading company	100%
AIM-listed shares (treated as unquoted)	100% (50% from April 2026)
Controlling holding (>50%) of quoted shares	50%
Land, buildings, or machinery used in a qualifying business you controlled	50%

Qualifying Conditions

To qualify for BPR:^[2]

The property must be relevant business property (as defined in the Inheritance Tax Act 1984)
The transferor must have owned the property for at least 2 years before the transfer
The business must be a trading business (not mainly investment)
For assets used in a company, the transferor must have control of the company

What Does Not Qualify?

BPR is not available for businesses that consist wholly or mainly of:^[2]

Dealing in securities, stocks, or shares
Dealing in land or buildings
Making or holding investments

This means buy-to-let property businesses, investment holding companies, and property development companies focused on holding (rather than trading) typically do not qualify.

The “wholly or mainly” test: If a business has both trading and investment activities, BPR may still be available if the business is mainly trading. HMRC takes a holistic view, looking at turnover, profits, assets, employee time, and the overall character of the business. Generally, if more than 50% of activities are trading, BPR should apply (though HMRC may argue the point).

April 2026 Changes

The Autumn Budget 2024 announced significant changes to BPR from 6 April 2026:^[3]

The first £1 million of combined BPR and APR qualifying assets continues to receive 100% relief
Above £1 million, relief is reduced to 50% — meaning the excess is taxed at an effective rate of 20%
The £1 million allowance is shared between BPR and APR qualifying assets
AIM shares will receive 50% relief (not 100%) regardless of the £1m cap
The £1 million allowance is per person and is not transferable between spouses

Example under new rules: A sole trader business worth £2 million. The first £1m gets 100% BPR (IHT: £0). The next £1m gets 50% BPR, leaving £500,000 taxable. IHT on the business: £500,000 × 40% = £200,000. Under current rules, the entire £2m would be exempt.

The 2-Year Ownership Rule

The transferor must have owned the business property for at least 2 years before the transfer. There are exceptions:^[2]

Replacement property: If the current property replaced another qualifying property, the combined ownership period counts
Inherited property: If the transferor inherited the property from a spouse, the spouse’s ownership period is added

Frequently Asked Questions

What qualifies for 100% BPR?

Currently, 100% BPR applies to: a sole trader business or share in a partnership, shares in an unquoted trading company (including AIM-listed shares), and interests in a business. From April 2026, 100% relief on these assets is capped at £1 million of combined agricultural and business property; above that, 50% relief applies.

What are the April 2026 changes to BPR?

The Autumn Budget 2024 announced that from April 2026, the first £1 million of combined BPR and APR qualifying assets will continue to attract 100% relief. Above £1 million, relief is reduced to 50% — meaning IHT will be charged at an effective rate of 20% on the excess.

Do AIM shares qualify for BPR?

Yes. Shares listed on the Alternative Investment Market (AIM) are treated as unquoted for BPR purposes and currently qualify for 100% relief. From April 2026, AIM shares will receive 50% relief (not 100%), regardless of the £1m threshold.

Can I claim BPR on a buy-to-let property business?

Generally no. A buy-to-let property portfolio is typically an investment activity, not a trading business. BPR is not available for businesses that consist wholly or mainly of dealing in securities, stocks or shares, land or buildings, or making or holding investments.

Sources

Business relief for Inheritance Tax — GOV.UK
IHTM25000 – Business property relief — HMRC
Autumn Budget 2024: Inheritance Tax reforms — GOV.UK