On Easter Monday, the 6th of April this year, Business Property Relief (BPR) reform comes into effect and will potentially put a crack in nest eggs that business property owners and investors plan to leave to their heirs.
Business Property Relief reform was first announced in the 2024 Budget and immediately caused a furore, specifically with regard to its likely impact on the viability of passing-on farm land and properties from one generation to the next. While BPR reform has since been revised to include a more generous allowance – from £1 million to £2.5 million, and permitting the allowance to be transferable between spouses, there is still concern about its impact on the UK’s non-recognised stock exchanges, such as AIM.
The London Stock Exchange together with other industry professionals and media commentators have suggested that the reforms could drive a shift away from AIM shares into unquoted shares. As a result of AIM shares qualifying for less tax relief, they fear that AIM shares will become less attractive.
Whether or not that proves to be the case, the reforms are significant and will impact the Inheritance Tax (IHT) position of UK business property owners and investors holding shares listed on the AIM market and other non‑recognised exchanges in companies with hotel premises, restaurant or retail chains, commercial office space, warehouses or factories, for example. The changes represent substantial shifts to BPR and there is a lot for investors to consider.
What is changing from April 2026?
From 6 April 2026, BPR will be reformed so that the existing 100% relief applies only up to a £2.5 million combined allowance for qualifying agricultural and business assets; value above that will receive 50% relief (an effective IHT rate of up to 20%). Any unused allowance is transferable between spouses/civil partners. In addition, shares “not listed” on recognised stock exchanges (including AIM) will only attract 50% BPR in all cases.
Background: How the BPR reforms developed
The reform was first announced at the Autumn Budget 2024, when the government signaled it would cap the availability of the 100% relief and reduce the rate for shares designated “not listed” on recognised stock exchanges (such as AIM).
Draft clauses were published on Legislation Day (21 July 2025) for technical consultation, confirming the core structure and adding indexation from 2030/31.
At the Autumn Budget 2025, the Chancellor amended the package so that any unused portion of the new allowance could be transferred to a surviving spouse or civil partner.
In a late amendment to the rules and in response to the considerable protest against the upcoming changes, in December 2025 the allowance was increased to £2.5 million per individual (so couples can potentially shelter £5 million together), and the government reiterated that liabilities on qualifying APR/BPR assets can be paid in ten equal interest‑free instalments.
When do the new rules apply?
The reforms take effect for deaths and chargeable transfers on or after 6 April 2026. However, anti‑forestalling applies to certain lifetime gifts made after 30 October 2024 where the donor dies within seven years – preventing last‑minute planning from bypassing the cap.
Estates and trustees can continue to settle qualifying agricultural or BPR inheritance tax in ten annual interest‑free instalments, which may be important where liquidity is constrained.
Definition of “listed” and the new treatment of listed shares
In addition to the cap for all business property shares that are not listed on an HMRC ‑ recognised stock exchange, including the AIM and similar growth/MTF venues, any shares traded on foreign markets that HMRC does not recognise will qualify for BPR at 50% only.
Historically, BPR for listed shares has been limited -typically 50% relief only where the holding confers control – while many AIM holdings were treated as unquoted and qualified for 100% BPR. Under the reforms, all “not listed” shares, including AIM and similar foreign venues, will receive only 50% BPR regardless of size or control.
What this means for investors
For Main Market portfolios, BPR remains tightly circumscribed. Most ordinary listed holdings will not qualify for relief, and control holdings may attract only 50%, subject to the usual trading conditions.
Shares on AIM and other “not listed” markets will no longer qualify for BPR at 100% BP, instead qualifying shares will qualify for relief at 50% only from 6 April 2026.
For investors who have AIM portfolios, to access full BPR they should plan for an effective IHT rate of up to 20% on those holdings (subject to other allowances and exemptions).
Start planning now
- Review AIM portfolios: Where BPR was the primary driver of your investment, reassess risk/return and IHT positioning in the round, alongside other allowances and exemptions.
- Liquidity planning: A dry tax charge on succession can be material for owner‑managed businesses. People should consider funding mechanisms to avoid forced disposals.
- Use allowances: With the £2.5 million 100% allowance and spousal transferability, re‑balancing ownership between spouses/civil partners and reviewing Wills can maximise relief.
Trusts remain useful but require careful navigation of ten‑year and exit charges under the new regime.
Given the scale of the changes, investors with significant AIM or private business holdings should review their IHT strategy well ahead of April 2026. Tailored advice is essential, particularly where business structures, family trusts or cross‑border considerations are involved.
How we can help
Navigating the new BPR rules will require careful planning, especially for investors holding AIM shares or interests in business property that were previously expected to qualify for 100% relief.
Our experts can help you assess how the reforms affect your current estate plans, model your future Inheritance Tax exposure and identify opportunities to restructure ownership to maximise available reliefs.
For more information or bespoke advice, please contact Stephen Kenny.
