Business Property Relief reform from 6 April 2026: what the £1 million allowance means for business owners

From 6 April 2026, the Inheritance Tax treatment of business and agricultural property changed. Business Property Relief and Agricultural Property Relief no longer give unlimited relief at 100% for all qualifying assets. Instead, a new £1 million allowance applies, in addition to existing nil-rate bands and exemptions, and the change is now in force.

The allowance is combined, not separate for each asset or each type of relief. It applies to the combined value of property in an estate qualifying for 100% business property relief or 100% agricultural property relief. The first £1 million of that combined qualifying value can still receive relief at 100%, while qualifying value above £1 million receives relief at 50%. For example, if qualifying assets total £2.5 million, £1 million would be relieved at 100% and the remaining £1.5 million at 50%, giving total relief of £1.75 million and leaving £750,000 of that value before nil-rate bands and other exemptions. Note that 50% relief is not a 50% tax rate: it halves the taxable value of the excess.

The reform affects owners of trading businesses and farms, shareholders in qualifying unlisted trading companies, and the personal representatives who administer their estates. It also affects people who make chargeable lifetime transfers, such as gifts or settlements into trust, and trustees liable to periodic and exit charges. Qualifying status still matters for every asset, because non-qualifying and investment elements do not become qualifying simply by sitting inside a business.

One exception is important. Certain shares admitted to trading on a recognised stock exchange but designated as not listed, and certain qualifying shares listed on foreign exchanges that are not recognised stock exchanges, move to relief at 50% in all cases. Owners should not assume that every shareholding that previously attracted 100% relief automatically benefits from the first £1 million at 100%.

Owners should review up-to-date valuations, identify which assets genuinely qualify, and check wills, succession plans and trust records. Liquidity also needs attention: an estate may face a larger Inheritance Tax bill than under unlimited relief, although the option to pay Inheritance Tax by equal annual instalments over 10 years interest-free has been extended to property eligible for agricultural or business property relief. That helps cash flow but does not remove the liability, and gifts and trust transfers can involve transitional rules. Restructuring solely to chase relief can create other tax, commercial and family consequences, so take advice on the full estate and business, not on the £1 million figure alone.