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 6 April 2026: 100% BPR is capped at £2.5 million per estate (combined with APR); assets above that 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 £2.5 million per estate of combined BPR and APR qualifying assets continues to receive 100% relief
- Above £2.5 million, relief is reduced to 50% — meaning the excess is taxed at an effective rate of 20%
- The £2.5 million allowance is shared between BPR and APR qualifying assets
- AIM shares will receive 50% relief (not 100%) regardless of the £2.5m allowance
- The £2.5 million allowance is per estate, and any unused amount is transferable to a surviving spouse or civil partner (from 6 April 2026)
Example under new rules: A sole trader business worth £4 million. The first £2.5m gets 100% BPR (IHT: £0). The remaining £1.5m gets 50% BPR, leaving £750,000 taxable. IHT on the business: £750,000 × 40% = £300,000. Under the pre-April-2026 rules, the entire £4m would have been 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 6 April 2026, 100% relief on these assets is capped at £2.5 million of combined agricultural and business property; above that, 50% relief applies.
What are the April 2026 changes to BPR?
From 6 April 2026, the first £2.5 million per estate of combined BPR and APR qualifying assets continues to attract 100% relief. Above £2.5 million, relief is reduced to 50% — meaning IHT is charged at an effective rate of 20% on the excess. The 100% allowance was originally announced at £1 million in the Autumn Budget 2024, then raised to £2.5 million on 23 December 2025.
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 6 April 2026, AIM shares will receive 50% relief (not 100%), regardless of the £2.5m allowance.
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.
Further Reading
- Agricultural Property Relief (APR) — IHT relief for farmland
- IHT Planning Basics — using BPR in estate planning
- Trusts and Inheritance Tax — BPR in the context of trusts
- Calculating the Estate Value — how BPR reduces the estate
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