Business Relief (“BR”), also known as Business Property Relief, is an inheritance tax relief introduced in 1976.

BR works by exempting either 100% or 50% of the value of qualifying property from the estate’s value for inheritance tax purposes, so understanding what qualifies matters as much as understanding the relief itself. Prior to the changes introduced from 6 April 2026, qualifying transfers of unquoted shares could benefit from 100% BR, subject to the relevant conditions being met.

For how inheritance tax works more broadly, including the nil-rate band, residence nil-rate band and how the 40% rate is calculated, see What is Inheritance Tax and who pays it?

The relief was introduced to help family-owned businesses pass from one generation to the next, without the need to sell assets or break up the business to meet an inheritance tax bill.

What qualifies for Business Relief?

It generally applies to trading businesses, interests in a business, and certain shares in unlisted companies. However, businesses mainly involved in investment activities, such as holding property or investments, do not usually qualify.

Criteria

To qualify for BR, an asset generally needs to meet all the following conditions:

01

The type of asset

A business (sole trader or partnership interest), shares in an unquoted company, or personally held assets used in a qualifying business

02

Ownership period

Owned throughout the two-year period leading up to the transfer

03

Trading intent

Carried on with the intention of making a profit

04

No pending sale

No binding contract for sale of the asset at the time

05

Company status

Not in liquidation or winding up

06

Trading activity

The business must not consist of “wholly or mainly” dealing in shares, securities, land or buildings, or making or holding investments

Satisfying these conditions does not, by itself, guarantee relief. HMRC determines eligibility based on the facts and circumstances at the time of the transfer, and that assessment may change if the underlying business subsequently changes.

An investment may qualify for BR once it has been held for two years. In certain circumstances, relief may be available sooner, for example, where an investment was made using proceeds from a previous BR-qualifying asset within three years of its sale, or where it was inherited from a spouse and the combined ownership period meets the two-year requirement.

What's changed from 6 April 2026?

The six conditions above haven’t changed. What’s changed is how much relief is available. The guide Inheritance tax changes 2026 provides the full context. The first £2.5 million of qualifying assets per individual continued to benefit from 100% relief. Qualifying assets above this threshold receive relief at 50%.

The key change affecting BR assets is that listed shares treated as unquoted, including AIM-listed shares, now qualify for only 50% relief rather than the previous 100%. For clients with existing AIM holdings, this represents a significant shift. Explore the practical implications and available options in a dedicated case study:

BR Planning After April 2026: Fix the AIM Gap

Common questions

Does Business Relief apply automatically, or does something need to be claimed?

BR is not granted automatically. Following a death, the executors or personal representatives must claim the relief when submitting the Inheritance Tax return as part of the estate administration process. HMRC may then review the claim and determine whether the qualifying conditions were met at the date of death and, where relevant, throughout the required ownership period. BR is not guaranteed, as eligibility can be lost if either the ownership requirements or the nature of the underlying business cease to satisfy the qualifying conditions. In most cases, the relevant business property must have been owned for at least two years immediately before death.

Do AIM shares still qualify for Business Relief?

Yes, but at a reduced rate. From 6 April 2026, AIM-listed shares treated as unquoted for BR purposes qualify for 50% relief rather than 100%. See our case study on what this means for existing AIM holdings.

What is the combined allowance available to married couples and civil partners?

The £2.5 million 100% relief allowance applies per individual. As a result, married couples and civil partners may be able to apply up to £5 million of combined BR and Agricultural Property Relief (APR) qualifying assets at the 100% relief rate, where any unused allowance is transferred to the surviving spouse or civil partner. This transferability applies from 6 April 2026. As with all tax reliefs, entitlement depends on the couple’s circumstances and the legislation in force at the relevant time.

TECHNICAL TEAM

Simon Palmer

Simon Palmer

Group Technical Director

Sebastien Couplez

Sebastien Couplez

Technical Director

Jack Ingilby

Jack Ingilby

Technical Manager

Ingenious Insights case studies

BR Planning After April 2026: Fix the AIM Gap

BR Planning After April 2026: Fix the AIM Gap

Read more
Manage Pension-related Inheritance Tax (IHT) Risks Using IEP Apex

Manage Pension-related Inheritance Tax (IHT) Risks Using IEP Apex

Read more
Business Relief & Post-Business Self Planning

Business Relief & Post-Business Self Planning

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Business Relief & Power of Attorney

Business Relief & Power of Attorney

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Ingenious Insights: more from the adviser education series

Understanding how BR works and what qualifies is only the first step. From there, the natural next questions are what an investment delivers for a client, and how it stacks up against other approaches.

01

What is inheritance tax and who pays it?

A plain-English guide for advisers: how inheritance tax works, the key allowances and why more estates are affected than ever before.
Read more
02

What is Business Relief?

How Business Relief works, what qualifies, and what's changing from April 2026, including the new £2.5m allowance and the AIM shares change.
03

Inheritance tax changes 2026

A practical summary of the April 2026 inheritance tax changes and the steps advisers should take to protect their clients' estate plans now.
Read more
04

What does an investment in IEP provide?

An adviser's guide to what an IEP investment provides: Business Relief, optional insurance cover, a defined strategy, access to capital and Investors' Relief.
Read more
05

How does a Business Relief investment compare to other estate planning options?

Business Relief investments, gifts, trusts, AIM shares and life insurance for inheritance tax compared: the advantages and risks of each estate planning solution.
Read more
06

Business Relief and Trusts

Entry, periodic and exit charges explained for discretionary and interest in possession trusts, with worked examples and how Business Relief can help.
Read more

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