Business Property Relief Changes 2026: Why Business Valuations Matter for Inheritance Tax
Changes to Business Property Relief (“BPR”) and Agricultural Property Relief (“APR”) have altered the inheritance tax (“IHT”) position for many business owners and farming families. From 6 April 2026, the availability of 100% relief is restricted, making it increasingly important to understand the current value of qualifying business and agricultural assets.
Key changes to Business Property Relief and Agricultural Property Relief
• 100% relief up to £2.5 million: The first £2.5 million of combined qualifying business and agricultural assets may continue to qualify for 100% relief from IHT.
• 50% relief above the allowance: Qualifying value above the allowance may receive relief at 50%, resulting in an effective IHT charge of up to 20% on that excess value.
• Transferable allowance for couples: Any unused allowance may be transferable to a surviving spouse or civil partner, potentially allowing a couple to benefit from up to £5 million of qualifying assets receiving 100% relief.
• Instalment option: The option to pay IHT by interest-free annual instalments over 10 years is expected to apply to all property eligible for APR or BPR.
Why a business valuation is important
Many business owners have a broad sense of what their business may be worth, but fewer have an up-to-date market valuation that can be relied on for succession and estate planning.
A professional valuation can help answer key questions, including:
• Is the business already worth more than £2.5 million?
• Is it likely to exceed £2.5 million in the next few years?
• What could the potential IHT liability be under the new rules?
• Are there planning opportunities available before further growth occurs?
Without a current valuation, it can be difficult to assess the potential IHT exposure, identify available planning options or decide when action should be taken.
What planning options may be available?
Once the value of the business is understood, there may be several ways to review and potentially mitigate the IHT impact. The right approach will depend on the ownership structure, family circumstances, commercial objectives and wider tax position.
1. Passing assets to the next generation: A transfer of shares or business interests to children or other family members may allow future growth in value to accrue outside the current owner’s estate, subject to the relevant tax rules and anti-avoidance provisions.
2. Considering trust planning: Trust structures may offer flexibility when transferring wealth between generations, although they require careful advice because IHT, capital gains tax and ongoing trust charges may all be relevant.
3. Freezing value in the estate: Estate freeze planning may help retain the current value of a business interest within the estate while allowing future growth to pass to the next generation or to a trust.
When should you contact us?
If your business or agricultural assets are worth more than £2.5 million, or are expected to exceed that threshold in the future, it is sensible to review your position now.
We can assist with business valuations, IHT planning and succession planning strategies to help you understand how the changes may affect you and identify the most appropriate options for you, your business and your family.
Speak to our business valuation and tax advisers
If the changes to Business Property Relief could affect you, your business or your family, getting an up-to-date understanding of your business value is an important first step.
Our business valuation, tax and succession planning specialists can help you understand your potential inheritance tax exposure, assess the options available and plan for the future.
With Cowgills teams across the North West, including Bolton, Liverpool, Manchester, Stockport and Wigan, we work with business owners and families throughout the region to provide practical, joined-up advice tailored to their circumstances.
If you would like to discuss Business Property Relief, inheritance tax planning or obtaining a business valuation, contact our team today. And whilst you’re here, why not check out the Cowgills LinkedIn page for our latest company news and updates.
This article is intended as a general guide only and does not constitute legal or tax advice. The application of Business Property Relief, APR and IHT rules will depend on individual circumstances, and professional advice should be taken before any planning is implemented.
