Autumn Budget: Business Property Relief and the changes that may affect you and your business in 2026

November 24, 2025

Autumn Budget: Business Property Relief and the changes that may affect you and your business in 2026

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By Elliw Jones

Read time: 4 minutes

Today, Wednesday 26 November, the Autumn Budget 2025 is announced. A year on from last year’s announcement surrounding Inheritance Tax (IHT) and Business Property Relief (BPR), our Wills & probate experts share important considerations when it comes to you and your business.

In our article Agricultural Property Relief – What Farmers Need to Know and Do, we delved into the current APR and BPR position and the reliefs available. In this article, our expert Elliw Jones looks at BPR in more depth to see how it could affect your estate, from a business owners’ perspective.

As a business owner, when drafting a Will or considering the value of your estate and your retirement and succession planning, BPR will become a major consideration. As announced in last year’s budget, the UK government is introducing significant changes to IHT Business Property Relief from 6 April 2026.

What are the current allowances?

Currently, there is no limit on the value of assts to which BPR can apply. Therefore, qualifying business assets may pass free of IHT on death (or when transferring such assets in your lifetime) subject to certain conditions.

BPR applies to ‘relevant business property’, which can include:

• Shares in qualifying unquoted trading companies (qualifies for 100% relief)
• Interests in businesses, including a partnership (qualifies for 100% relief)
• Shares listed on AIM (qualifies for 100% relief)
• Land, buildings, machinery and plant, held personally or in certain trusts, and used in a company’s or partnership’s business carried on by the transferor (qualifies for 50% relief.)

Essentially, if BPR applies to an asset, its value for IHT purposes is reduced by either 50% or 100%.

The conditions for an asset to qualify for BPR include the following:

• The asset must have been owned for at least two years from the date of transfer
• The business is carried on with a view of making a profit
• The business must not consist of wholly or mainly of dealing in shares, land or buildings or making and holding investments

What are the upcoming changes to Business Property Relief?

For individuals, from 6 April 2026, BPR at the 100% rate will be restricted to £1m per person. The value of BPR for qualifying assets exceeding £1m will be taxed at 50% of the current rate (50% of 40% = 20%). Where, if relevant, the £1m allowance will be shared between qualifying agricultural and business property i.e. there will only be one £1m allowance, not one each for APR and BPR.

When it comes to trusts, an individual will have a lifetime £1m allowance on qualifying property, so can transfer up to that value without a charge to IHT.  This can be repeated every 10 years and can mitigate the potential IHT liability significantly. However, care should be taken as trusts can be complex and transfers into trusts can have Capital Gains Tax (CGT) implications.

If trusts were set up by the same settlor on or after 30 October 2024, the trusts will share one single allowance.

For transfers made before the Autumn Budget in 2024 the old rules will apply, but for transfers made between that date and 6 April 2026 there are transitional rules that will apply.

What can I do?

There are a number of considerations when it comes to planning for the BPR changes, including:

• Lifetime Planning, to include transferring qualifying assets to a spouse or civil partner to make the most of each individual’s £1m allowance;
• Make gifts to those you wish to inherit your business;
• Transfer property into trust or looking into alternative structures such as Family Investment Companies. See our article on FICs here;
• Take out a life insurance policy to cover any risk of IHT liability.

When it comes to Estate Planning, make or amend your Will to make sure it includes appropriate provisions for your business. In order to plan properly it’s important that you have up to date valuations of the business property you own. Capital Gains Tax consequences will also need to be taken into consideration.

Autumn 2025 Budget

It is always difficult to predict what the chancellor will include in the budget.

There have been some rumours regarding lifetime giving, mainly that:

• A cap may be put on the amount an individual can give to another above which an immediate charge to IHT will be payable (currently such gives only become chargeable to IHT if the person making the gift dies within 7 years – because of this rule, such gifts are known as ‘Potentially Exempt Transfers’ or ‘PETs’); and/or
• The 7-year period in relation to PETs may be extended – possibly to 10 years i.e. if you were to make a gift, the value

We will share relevant updates following the Budget 2025 announcement.

Our Wills and Estate Planning specialists can help you navigate this complex area and help structure your estate tax efficiently. If you would like to discuss how these changes could affect your business succession or estate planning get in touch via our contact form or for a free no obligation chat, call 02920 829 100.