Changes to inheritance tax were announced in the Budget that have caused consternation to business owners across the UK. What exactly is changing and what could this mean for you?
What is Business Property Relief?
Business property relief (BPR) is a type of inheritance tax relief that helps reduce the amount of tax that is paid when business assets are passed down in a person’s estate. Currently, the relief has no financial limit, meaning regardless of the value of the assets, they can be passed on with no inheritance tax payable.
This relief has played an important role in families being able to pass on business assets without having to worry about inheritance tax.
What changed in the budget?
Based on the Autumn Budget announcement, there will be a new £1 million limit where 100% relief will be given. The relief will then reduce to 50% on the value that exceeds £1 million.
In addition, (quoted) shares that are designated as “not listed” on the markets of recognised stock exchanges, such as AIM, will only ever get 50% relief regardless of whether they would otherwise qualify as business assets.
When will the change take effect?
The intention is that this change will take effect from 6 April 2026. So, these changes do not take immediate effect and mean that there could be some scope for planning or transferring of assets that will minimise your exposure to inheritance tax when the new limits come into force.
What should I do now?
If your estate is likely to be subject to inheritance tax, then it can pay to consider using some estate planning strategies to reduce your exposure to inheritance tax. As a starting place, it is a good idea to assess the current value and makeup of your estate.
Please get in touch with us if you would like any help with doing this, or if you would like to discuss whether there are any estate planning strategies that are open to you. We would be happy to help you!
