What is Business Property Relief (BPR)?
Business Property Relief was introduced in 1976 to help protect family‑owned businesses when they were passed on after death. Without relief, families might have needed to sell or break up a business to meet an inheritance tax bill.
Over time, the rules have evolved so that:
- BPR is no longer limited to immediate family ownership
- A wider range of shareholders can benefit, provided the underlying business qualifies
- Certain listed investments, such as qualifying companies on the Alternative Investment Market (AIM), can qualify for relief
Broadly, if an asset qualifies for BPR and the conditions are met, some – or all – of its value can be ignored when calculating IHT.
It’s important to remember that BPR is a relief from IHT, not from investment risk. The underlying business or company can still go up or down in value and clients could lose money.
How did AIM become relevant for inheritance tax planning?
AIM is a market for smaller, growing companies. It launched in 1995 as the successor to the Unlisted Securities Market and is part of the London Stock Exchange.
Historically, AIM became attractive for IHT planning for two main reasons:
In 1996 full BPR was available on qualifying AIM shares.
BPR was increased from 50% to 100% for certain business assets. At the same time, for IHT purposes, qualifying AIM trading companies were treated as “unquoted”.
- This meant that, if the shares met the rules and were held for at least two years and at the time of passing, investors could receive 100% BPR on those AIM holdings.
- In practice, the value of those shares could be reduced to zero in the IHT calculation.
From 2013, AIM shares became eligible to be held within a stocks and shares Individual Savings Account (ISA). This created a powerful combination:
- The ISA wrapper could shelter income and capital gains from tax.
- BPR could, in certain circumstances, reduce the IHT value of qualifying AIM shares held in the ISA to zero after two years.
These changes encouraged long‑term investment into UK growth companies and provided another planning tool for families looking to manage potential IHT liabilities.
What changes will come in from 6 April 2026 for AIM and other ‘unlisted’ shares?
The reliefs for AIM and other 'unlisted’ shares are scheduled to change from 6 April 2026.
Following the Autumn Budget in October 2024, the government announced that:
What does that mean in practice?
If an investor passes away on or after 6 April 2026 holding qualifying AIM shares:
- The shares may still qualify for BPR, provided:
- they have been held for at least two years, and
- they still qualify at the time of passing
- However, only 50% of their value will be relieved from IHT.
Given that the standard rate of IHT is 40%, this change effectively creates a 20% IHT charge on qualifying AIM investments at death (40% tax on the remaining 50% of value), assuming no other reliefs or exemptions apply.
For comparison:
- Before 6 April 2026: Qualifying AIM shares held for two years could attract 100% BPR, resulting in no IHT on those holdings.
- From 6 April 2026: Qualifying AIM shares may attract 50% BPR, resulting in an effective 20% IHT charge on the value of those holdings.
Other changes to BPR and Agricultural Property Relief (APR)
At the same Autumn Budget in 2024, the government also announced changes for:
- Private company shares, and
- Agricultural assets
These assets were confirmed to continue to benefit from 100% relief under:
- Business Property Relief (BPR) for qualifying business assets; and
- Agricultural Property Relief (APR) for qualifying agricultural property
However, the amount of relief is being capped.
Introduction of a cap – and then an increase
In the 2025 Autumn Budget, a combined BPR and APR cap of £1 million per person was announced.
This was subsequently updated on 23 December 2025, when it was confirmed that:
- The BPR and APR threshold will increase to £2.5 million per person from 6 April 2026
- This £2.5 million limit is transferable between spouses and civil partners
In practice, this means that:
- An individual can benefit from up to £2.5 million of qualifying private company and agricultural assets being relieved from IHT under BPR and APR.
- A couple (spouses or civil partners) can potentially benefit from a combined allowance of up to £5 million of such qualifying assets being relieved from IHT.
Anything above these thresholds may fall back into the estate for IHT purposes. The precise impact will depend on the overall structure and value of the estate.
What does this mean for IHT planning?
The combined effect of these changes is that:
- Whilst AIM-focused IHT strategies have seen their relief fall from 100% to 50%, they are still a compelling option for supporting UK smaller companies as a wider IHT tax planning tool. It’s important to note that AIM investments are considered high risk and are not right for everybody – clients could lose some or all of their money.
- Business owners and farming families may still be able to protect significant value from IHT through BPR and APR, particularly where the value of qualifying assets is within the new caps.
- The increased thresholds (£2.5 million per person, £5 million per couple) provide meaningful scope for planning around private company and agricultural assets.
For many families, these changes will not remove the benefits of BPR and APR, but they do change how those benefits are best accessed. Structures and plans that made sense under the old regime may need updating.
Key points at a glance
- BPR was introduced in 1976 to help keep family businesses in family hands rather than being sold to pay IHT.
- AIM shares became fully qualifying for BPR in the mid‑1990s, and from 2013 could be held in Stocks and Shares ISAs, combining IHT, income and capital gains tax advantages.
- From 6 April 2026, BPR on qualifying AIM and other “not listed” shares is expected to fall from 100% to 50%, creating an effective 20% IHT charge on those assets, assuming the usual conditions are met.
- Private company shares and agricultural assets are expected to retain 100% relief, but subject to a combined BPR/APR cap of £2.5 million per person, transferable between spouses or civil partners.
- As a result, up to £5 million of qualifying private company and agricultural assets held by a couple could benefit from inheritance tax relief from 6 April 2026.
Time to review a clients financial plan?
BPR and APR are two reliefs available for tax-efficient planning, especially when it comes to IHT. Even with the changes, holding AIM shares can form part of this strategy. Investing in AIM is high risk and not suitable for all investors. Clients should be prepared to lose some or all of the money they invest and shares may be difficult to sell.
Planning today could help clients save on tax, allowing them to potentially grow, protect and pass on more of their wealth in the future.
If you would like to speak to one of our team about BPR and AIM and how we could help you and your clients, please fill in the form below and we'll get in touch.
