October 2025 — Generation Financial Planning Estate Planning Insights
If you’re a business owner, you’ve probably worked tirelessly to build your company — but have you thought about what happens to it when you’re no longer here?
It’s not a pleasant thought, but it’s an essential one. Without proper planning, your business could face a 40% inheritance tax (IHT) charge when it’s passed on to your family. That’s where Business Property Relief (BPR) comes in — one of the most valuable tax reliefs available to entrepreneurs.
What Is Business Property Relief (BPR)?
Business Property Relief was designed to ensure that trading businesses can pass from one generation to the next without being broken up to pay IHT. In simple terms, BPR can reduce the taxable value of your business assets by up to 100%.
This means that shares in your company, or your partnership interest, could be transferred to your heirs with no inheritance tax liability at all — provided the business qualifies.
To qualify for BPR, the business generally must:
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Be a genuine trading business (not mainly investment-based), and
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Have been owned for at least two years before the transfer or death.
Qualifying assets can include:
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Shares in an unlisted trading company
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Business interests as a sole trader or partner
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Certain AIM-listed shares
It’s one of the UK’s most generous reliefs — but also one of the most misunderstood.
What’s Changing — Autumn 2024 Reforms
The government announced major reforms to Business Property Relief in the Autumn 2024 Budget, set to take effect from April 2026. These changes will significantly affect business owners and trustees.
Here’s a summary of what’s coming:
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£1 Million Cap on 100% Relief
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Currently, BPR can reduce inheritance tax on qualifying assets by 100%, no matter how large the value.
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From April 2026, only the first £1 million of qualifying business or agricultural assets will get full (100%) relief.
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Any amount above that will qualify for 50% relief instead.
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Unlike other allowances, this cap cannot be shared or transferred between spouses.
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Reduced Relief for AIM Shares
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Shares traded on markets such as AIM will only qualify for 50% relief, even on the first £1 million.
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This change could affect many investors who hold AIM portfolios for IHT efficiency.
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Trusts and BPR — New Rules
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Trusts will each have their own £1 million BPR allowance, but there’s a catch:
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If you create multiple trusts after 30 October 2024, they must share a single £1 million allowance.
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Trustees must also ensure the trust continues to hold qualifying business assets — otherwise, BPR can be lost.
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Transitional rules will apply to transfers made before April 2026, so timing will be critical.
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Instalment Payments Extended
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Families inheriting qualifying business assets will continue to benefit from the option to pay any tax due in instalments over 10 years, easing cashflow pressure.
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Why It Matters
For many entrepreneurs, their business is not only their life’s work but also their family’s financial foundation. These new rules mean you could face a much larger inheritance tax bill if you don’t review your estate planning before 2026.
If your business or your trust assets are valued above £1 million, or if you hold AIM shares for IHT efficiency, it’s time to act.
What You Can Do Now
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Review your business valuation and identify how much of it currently qualifies for BPR.
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Revisit any trust structures holding business assets to ensure they’ll continue to benefit under the new rules.
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Consider lifetime planning or restructuring before the changes take effect in April 2026.
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Seek specialist advice — this isn’t an area to leave to chance.
At Generation Financial Planning, we help business owners protect their companies and their families through tailored estate planning. With the upcoming BPR reforms, now is the time to make sure your business legacy — and your hard work — are properly safeguarded.
Contact us today for a confidential consultation about how these changes could affect you.
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