For many business owners across Sussex, one of the most valuable forms of tax relief available has long been Business Property Relief (BPR). This relief has historically allowed qualifying business assets to be passed on free from Inheritance Tax (IHT), providing a vital lifeline for families seeking to preserve the businesses they have built over generations.
However, significant changes announced by the Government in the Autumn Budget 2024, and subsequently refined, mean that from April 2026, this relief will look very different. If you own a business or hold shares in a qualifying unquoted company, now is the time to understand what these reforms mean for you and your family.
What Is Business Property Relief?
Business Property Relief has been a cornerstone of succession planning for decades. In broad terms, it allows certain business assets, including shares in unquoted trading companies, interests in partnerships, and assets used in a business, to qualify for relief from IHT at either 100% or 50%, depending on the nature of the asset/how it is held. For many owner-managed businesses, this has meant that, on death, the business’s value can pass to the next generation without a potentially crippling IHT bill. It has been one of the most powerful tools in the private client adviser’s armoury, and for good reason: without it, families could be forced to sell or break up a business simply to meet a tax liability.
What Is Changing?
On April 6th 2026, the Government introduced a cap on the amount of combined business and agricultural property that can benefit from 100% relief. Under the new rules, only the first £2.5 million of qualifying business and agricultural assets will attract full 100% relief from IHT.
Any value above that threshold will be subject to a reduced relief rate of 50%, meaning that the excess will effectively be taxed at 20% (being 50% of the standard 40% IHT rate). For businesses worth significantly more than £2.5 million, this represents a substantial shift and could, for the first time, give rise to a meaningful tax liability on death.
In addition, shares listed on the Alternative Investment Market (AIM), which currently qualify for 50% BPR, will see their relief rate reduced to 50% of the standard rate, effectively resulting in a 20% IHT charge, with no nil-rate allowance.
Under the initial proposals, the overall allowance stood at £1m, but significant pushback from the business and farming communities led the Government to raise it to £2.5m in December 2025.
The Spousal Transfer: A Key Concession
One of the most important refinements to the original announcement was a concession on the transferability of the £2.5 million allowance between spouses and civil partners. Initially, there was considerable concern that on the death of the first spouse, the £2.5 million allowance would simply be lost if the business assets passed to the surviving spouse (as such transfers are already exempt from IHT).
The Government has since confirmed that any unused portion of the £2.5 million allowance can be transferred to the surviving spouse or civil partner, in a manner similar to the way the existing nil-rate band and residence nil-rate band can be transferred. This means that a surviving spouse could potentially benefit from an allowance of up to £5 million before the reduced rate of relief applies.
For married business owners, this is a welcome development, but it requires careful planning to ensure the allowance is maximised and not inadvertently wasted, depending on the business’s value and future growth potential. It’s always worth reviewing your planning periodically for this very reason.
Why Should Sussex Business Owners Act Now?
Business owners should review their succession plans, Wills, and the overall structure of their estates in light of these changes. There are several key questions to consider. Is your Will structured to take full advantage of the transferable £2.5 million allowance? Have you considered lifetime gifting strategies that could reduce your estate’s exposure to IHT? Are your business assets structured in the most tax-efficient manner? Do you hold AIM-listed shares as part of your investment portfolio, and if so, have you reconsidered their role in your estate planning?
These are not questions with simple or universal answers. Every business, every family, and every estate is different, and the interaction between BPR, Agricultural Property Relief, the nil-rate bands, and the new rules creates a level of complexity that demands bespoke professional advice.
How Mayo Wynne Baxter Can Help
At Mayo Wynne Baxter, our expert Private Client team has extensive experience advising business owners across Sussex on estate planning, tax mitigation, and succession. We understand the unique pressures that business owners face, and we know that your business is not just a financial asset; it is your livelihood, your legacy, and often the product of a lifetime’s work. Our team can help you navigate these changes, review your existing arrangements, and put in place a plan that protects both your business and your family going forward.
The changes to BPR represent one of the most significant shifts in IHT planning in a long time. Do not leave it to chance. If you are a business owner and have not yet taken advice on these reforms, we would strongly encourage you to get in touch with our Private Client team at the earliest opportunity. A conversation today could make a significant difference to your family’s financial future tomorrow.
