Business Relief Changes 2026: Inheritance Tax Impact & What to Do
- Omar Aswat
- Jun 11, 2025
- 4 min read
Updated: Dec 22, 2025
The UK’s Business Relief (formerly Business Property Relief) and Agricultural Property Relief (APR) have long been cornerstones of inheritance tax planning, allowing business owners and investors to pass down their assets tax-efficiently. However, major reforms set to take effect from 6 April 2026 will alter how relief is applied, particularly for estates exceeding £1 million. These changes signal a shift in how the government approaches wealth transfer taxation, prompting business owners and investors to reassess their strategies.
Table of Contents
What Is Business Relief (BR)?
Business Relief is a tax incentive designed to reduce Inheritance Tax (IHT) on qualifying business assets. For decades, BR has allowed eligible businesses to benefit from 100% relief, ensuring continuity for heirs without the need to liquidate assets to cover massive IHT bills.
Key business assets qualifying for BR include:
Shares in unlisted trading companies or companies listed on AIM (Alternative Investment Market).
Ownership of a business or interest in a partnership.
Land, buildings, and machinery used wholly for business purposes.
Similarly, Agricultural Property Relief (APR) provides tax relief on qualifying farmland, buildings, and farming businesses, helping landowners mitigate estate tax liabilities.
New to inheritance tax rules? Read our comprehensive guide to how inheritance tax works in the UK.
What Are the 2026 Business Relief Changes?
The government’s new tax policy introduces a cap on the 100% relief, meaning estates above the threshold will be subject to higher tax liabilities. Here’s a breakdown of the key changes:
100% relief applies only to the first £1 million of qualifying business and agricultural assets.
Assets exceeding £1 million will receive only 50% relief, meaning a portion of the estate will be subject to IHT.
AIM-listed shares will see reduced tax advantages, with the relief dropping from 100% to 50%.
Quoted shares that provide control of a company and land used in business operations will continue to receive 50% relief, rather than full exemption.
The scope of qualifying assets may be redefined, affecting eligibility for BR and APR.
The changes primarily target larger estates, ensuring that high-value business assets contribute more to inheritance tax revenues. While these reforms aim to rebalance tax relief, they introduce new complexities for business owners planning generational wealth transfers.
Key Business Relief Changes in 2026: What You Need To Know
While many estates benefiting from BR and APR will remain unaffected, those exceeding £1 million in business assets will face significant tax increases. The sectors most impacted by these reforms include:
High-Net-Worth Business Owners: Entrepreneurs with thriving businesses valued beyond the threshold will need to reassess their estate planning. High-net-worth individual? Explore tailored tax strategies designed for you.
Agricultural Investors & Landowners: Farmers and rural estate owners with extensive land holdings could see higher tax exposure.
AIM Market Investors: Individuals with substantial investments in AIM-listed companies will lose full inheritance tax exemption.
Family-Owned Businesses: Generational businesses structured to benefit from BR will need to explore alternative tax planning strategies.
HMRC estimates around 2,000 estates annually are expected to see increased IHT liabilities due to these reforms.
How to Prepare for Business Relief Changes in 2026
Despite the upcoming changes, there are several proactive tax planning strategies that business owners can implement to minimise their inheritance tax liabilities:
Restructuring Business Holdings
Adjusting the structure of a business can optimise tax efficiency, especially for estates exceeding the new threshold. Business owners may explore group structures or holding companies to better manage tax exposure.
Leveraging Trusts and Family Investment Companies (FICs)
Setting up trusts or FICs allows businesses to transfer assets strategically, reducing taxable estate value while maintaining control.
👉 Before setting up a trust, ensure you avoid costly missteps. Read our guide on common trust mistakes.
Early Succession Planning
Business owners should start estate planning early to mitigate the impact of higher IHT charges. Phased transfers, lifetime gifts, and other strategies can help heirs retain control of business assets with reduced tax burdens.
Maximising Other Tax Reliefs
Using tax-efficient investment schemes like Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) can help reduce taxable estate values.
Consulting a Professional Tax Advisor
With changing tax laws, working with a tax specialist is crucial. A tailored estate planning strategy can ensure compliance while optimising tax relief.
Need help choosing the right professional? Here’s how to find the right Inheritance Tax advisor in the UK.
Act Now to Protect Your Business Assets Before 2026
The upcoming Business Relief changes will significantly impact UK business owners, landowners, and investors. Without proactive tax planning, estates exceeding £1 million could face increased inheritance tax liabilities.
At ASWATAX, we specialise in strategic estate planning, helping businesses navigate tax reforms, optimise relief, and safeguard wealth for future generations. Whether you're restructuring business holdings, exploring trusts, or planning succession, our expert advisors can guide you through these complex changes.
Meet Omar Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn. Book a call today to learn more about what Omar and ASWATAX can do for you.
*Disclaimer: ASWATAX is a firm of Chartered Tax Advisors, and we strive to provide accurate, up-to-date tax insights. Tax laws may change, so this content is for general guidance only and not a substitute for professional advice. Seek independent tax and legal counsel before making decisions. ASWATAX is not liable for any loss from reliance on this information. Use at your own risk.
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