Business Property Relief and Agricultural Property Relief - a practical guide for advisers

What are Business Property Relief and Agricultural Property Relief?

Business Property Relief

Historically, BPR has been a cornerstone of estate and succession planning for business owners.

It reduces the value of qualifying business assets when calculating IHT. It exists to support the continuity of trading businesses, allowing them to be transferred during lifetime or on death without being broken up or sold to meet an IHT charge.

• relief can apply at 100% or 50%², depending on the nature of the asset and conditions met
• claims are made by executors or trustees as part of the normal IHT administration process

Agricultural Property Relief

APR has long been central to succession planning for farming families, where land and buildings are essential to ongoing operations and difficult to divide or sell without disruption.

It applies to qualifying agricultural property, allowing the agricultural value of that property to be reduced for IHT purposes.

According to GOV.UK guidance³, agricultural property can include:

• land or pasture used to grow crops or rear animals
• farm buildings, farmhouses and cottages (where certain conditions are satisfied)
• certain agricultural shares and securities

Not all farm-related assets qualify. For example, agricultural machinery, livestock and harvested crops do not qualify for it. Property subject to a binding contract for sale is also excluded.

The key changes from April 2026

1. A new £2.5 million allowance for 100% relief¹

The most important change is the introduction of a £2.5 million allowance for 100% APR and BPR, applied to the combined value of qualifying agricultural and business property.

• the first £2.5 million of qualifying value continues to receive 100% relief
• any qualifying value above £2.5 million now receives 50% relief, rather than 100%
• this sits alongside the standard nil-rate band and, where available the residence nil-rate band

In practice, businesses or farms that previously relied on full relief may now face a partial IHT exposure where total qualifying value exceeds the allowance.

2. Transferability between spouses and civil partners¹

A significant development is the fact that any unused £2.5 million allowance can now be transferred to a surviving spouse or civil partner.

• unused allowance can be transferred on death from 6 April 2026
• where the first death occurred before 6 April 2026, the rules assume the full £2.5 million allowance is available for transfer
• this can allow couples to access up to £5 million of qualifying assets at 100% relief, subject to circumstances

This introduces additional planning flexibility - but only where ownership, wills and historic relief use are properly reviewed.

3. Trusts are within scope of the allowance¹

The reforms don’t just affect individuals. Trusts holding qualifying APR or BPR assets also benefit from the £2.5 million allowance, which applies to:

• entry into trust
• 10-year anniversary (periodic) charges
• exit charges

To prevent abuse, anti-fragmentation rules apply, preventing multiple trusts from being created to multiply access to the allowance. Legislation has also standardised how trust exit charges are calculated, based on unrelieved values, regardless of when the exit occurs.

For trustees and advisers, this significantly increases the importance of robust governance, valuation evidence and record keeping.

4. Chronological use of the allowance across lifetime and death

One of the most technically important - but easily overlooked - changes is how the allowance is applied.

Broadly, the £2.5 million allowance is applied chronologically across relevant lifetime transfers and the estate on death, subject to transitional rules.

Lifetime gifts of qualifying business or agricultural property can therefore reduce the allowance available on death. For individuals, the allowance will broadly refresh after seven years, although the detailed position depends on the timing and nature of earlier transfers. For trusts, the position is different. Separate rules apply under the relevant property regime, including periodic and exit charges, so the operation of the allowance is more complex and cannot be understood simply by reference to a seven-year reset.

This represents a major shift from how many clients historically viewed APR and BPR as “static” reliefs applied only at death.

5. Certain “not listed” shares, including many AIM shares, now qualify for only 50% relief¹

A further important change affects shares that are admitted to trading on a recognised stock exchange but are designated as “not listed”, including many AIM shares.

• from 6 April 2026, qualifying “not listed” shares receive 50% BPR rather than 100%
• this reduced rate applies independently of the £2.5 million allowance for assets which qualify for 100% relief
• meeting the usual qualifying conditions, such as the holding period, doesn’t restore 100% relief for these shares

This materially affects portfolios that historically relied on qualifying AIM holdings and similar “not listed” shares as a route to full IHT relief, and means those holdings should now be reviewed as part of any wider estate planning and liquidity strategy.

6. Instalment option extended¹

For assets inherited from 6 April 2026 onwards, IHT due on property qualifying for APR or BPR can be paid in up to 10 annual instalments on an interest-free basis, provided these instalments are paid on time. While this can ease pressure, it doesn’t remove the need for liquidity planning, particularly where families want to avoid ongoing debt or uncertainty.

Practical planning issues advisers should focus on

Liquidity: many clients are “asset rich but cash poor”

Wealth is often concentrated in business interests, agricultural land or farms, property, or shares, which:

• may not generate accessible cash
• may be difficult or disruptive to sell quickly

For this reason, liquidity planning therefore moves from a secondary consideration to a core part of effective advice, particularly where families want to avoid forced sales or disruption to trading or farming activity.

Valuations and administrative burden

Accurate valuations are now critical because relief is tied to a defined allowance and may apply only at 50% above the threshold. This increases costs and complexity for individuals and trustees, especially where assets are inherently hard to value - such as privately owned businesses or mixed-use estates. 

As a result, valuation accuracy moves from good practice to a core planning requirement. Advisers will need to think proactively about what needs valuing, when valuations should be refreshed, and how evidence will be documented. This is because eligibility, allowance use and IHT exposure now depend directly on those figures.

Trust planning: still relevant, but constrained

Trusts remain within scope of the allowance, but in practice they should be supported by:

• a clear planning purpose
• strong governance and record‑keeping
• robust valuation evidence

Without this, clients risk increased complexity, unexpected charges and HMRC challenge.

Lifetime planning under a single allowance

Gifts and trust transfers should be treated as part of a single, joined‑up allowance strategy rather than isolated actions taken at different points in time.

Failure to track Potentially Exempt Transfers (PETs) and Chargeable Lifetime Transfers (CLTs) can materially affect the position at death.

Succession routes: relief is only one part of continuity planning

Succession planning should support business continuity, leadership transition, tax and legal planning, and funding solutions - not rely on relief alone

Funding IHT without disrupting the plan

The reforms highlight a clear practical gap between tax planning and funding. Even where reliefs apply, partial exposure, timing differences and valuation uncertainty mean families may still face significant liabilities at death.

Within that framework, protection written in trust is commonly used to provide certainty around funding. Because proceeds sit outside the estate and are typically available quickly, they can help meet IHT liabilities without requiring the sale of core business or agricultural assets, while also avoiding delays associated with probate. Used appropriately, this supports both financial outcomes and continuity planning.

Sources:

¹ GOV.UK, HM Revenue & Customs, Agricultural property relief and business property relief changes - GOV.UK, updated 3 March 2026.

²GOV.UK, Business Relief for Inheritance Tax: Overview - GOV.UK, accessed May 2026.

³GOV.UK, Agricultural Relief for Inheritance Tax - GOV.UK, accessed May 2026.

All content is available under the Open Government Licence v3.0.

 

Important information

This information has not been approved for use with customers and is based on Aviva’s interpretation of current law and legislation, and our understanding of HM Revenue & Customs (HMRC) practice as at 6 April 2026.  It is provided for general information purposes only and should not be relied upon in place of legal or other professional advice.  Both the law and HMRC practice will change from time to time and our interpretation may be subject to challenge by HMRC or other regulatory body. Aviva cannot act as legal adviser for you or your clients.  You should always seek appropriate legal or other professional advice.