If you own a UK business worth more than £2.5 million, the April 2026 changes to Business Property Relief fundamentally alter your estate plan. Until now, qualifying business assets could pass entirely free of Inheritance Tax under 100% BPR. That assumption—which underpinned decades of succession planning—no longer holds.

The Numbers

From April 2026, BPR at 100% applies only to the first £2.5 million of combined business and agricultural property (transferable between spouses for up to £5 million per couple). Above that threshold, relief drops to 50%, meaning an effective 20% IHT rate. A single founder with a business valued at £6 million faces approximately £700,000 in IHT where previously there was none. For AIM-listed shares, the picture is worse—they now qualify for only 50% relief regardless of value. That is not a rounding error—it is the difference between a business that survives succession and one that must be partially sold or restructured to pay the tax.

The Architecture

The instrument that addresses this: an irrevocable discretionary trust funded with business shares during the owner’s lifetime. The transfer uses the nil-rate band and starts the seven-year clock. Growth inside the trust accrues outside the personal estate. The trust protects the shares from IHT, creditors, and family disputes simultaneously.

For businesses where the owner needs to retain operational control, a careful separation of voting and economic rights allows the transfer of value without surrendering management authority. The trust holds the economic interest. The owner retains voting shares. Both objectives are served.

The Agricultural Dimension

Agricultural Property Relief faces the same cap. Farming families who have relied on 100% APR for generations now face IHT on the value of their land and buildings above £1 million. For many working farms, this threatens the viability of the operation itself. The trust architecture that works for business shares also works for agricultural land—with additional considerations for tenancy structures and operational continuity.

The window between now and April is not wide. Families who act now start their seven-year survival period under the current rules. Those who wait may find themselves planning under a regime that offers even less relief.

Grace can help you evaluate how the BPR changes affect your specific business.