Autumn Budget 2024: Important updates to Business Property Relief

The Government announced that it will make significant changes to Business Property Relief (BPR) from 6^th April 2026. Currently, relief applies to certain businesses and/or interests in businesses at a rate of either 50% or 100%.

What are the changes?

Starting from 6^th April 2026:

• Relief at the rate of 100% will only be available for the first £1m of combined business property. This £1m allowance will not apply to Alternative Investment Market (AIM) shares, for which the maximum rate of relief will be 50% from 6^th April 2026.
• Once the £1m allowance is exceeded, the maximum rate of relief will be 50%. Assets automatically receiving 50% relief will not use up the allowance which we take to mean that only assets currently qualifying for relief at the rate of 100% will use up the £1m allowance.
• Any unused part of the £1m allowance will not be transferable between spouses.
• These rules will also impact claims for Agricultural Property Relief (APR) on farming businesses and claims for 100% relief APR and BPR will be capped at £1m in total.

The £1m allowance will apply after April 2026 to:

• Property in a person’s estate on death.
• Gifts made to individuals on or after 30^th October 2024 and in the 7 years before death if the death occurs on or after 6^th April 2026.
• Gifts into trust – the policy paper does not state whether this applies to transfers made from 30^th October or 6^th April 2026.

Where settlors have created more than one trust before 30^th October 2024, each trust will benefit from a £1m allowance for 100% relief from 6^th April 2026.

Where multiple trusts are created by the same settlor after 30^th October 2024, the £1m allowance will be divided between them.

The new rules will apply to lifetime transfers made on or after 30^th October 2024 if the donor dies on or after 6^th April, but it is not yet clear as to whether the new rules will restrict relief on gifts made before 30^th October, but which come into charge because of a death within 7 years.

What actions should be taken?

Business owners need to review estate planning arrangements. They should do so as soon as possible and before 5 April 2026. The sorts of actions that may be appropriate need to be considered carefully and with regard not only to the inheritance tax but to the wider commercial and personal circumstances.  

It is appropriate to consider the following:

• Reviewing your will – you may require a new or updated will to ensure your estate is divided in accordance with your wishes.
• How the changes will impact the administration of your estate – for example how the inheritance tax be funded.
• Investing in life cover – this can provide funds on death to help manage the impact of inheritance tax and can avoid the potential disruption arising from selling or gifting assets during your lifetime.
• Gifting assets during your lifetime to:
  • your spouse or civil partner – this can maximise the relief available under the new provisions,
  • a new or existing trust – there is a window of opportunity before 5 April 2026 to move existing business assets of unlimited value into a trust
  • other beneficiaries – it is important to understand the commercial impact of doing so as well capital gains tax.

Budget Hub

For more information on updates from the Budget, and our latest reactions, visit our dedicated Budget Hub.

Further guidance

For further guidance on Business Property Relief, please do not hesitate to contact us for more information on 01903 234094.