27th October 2025 ❘

The Clock Is Ticking: What the 2026 Business Property Relief Changes Mean for Succession Planning

The Clock Is Ticking: What the 2026 Business Property Relief Changes Mean for Succession Planning

By Jennifer Bell, Corporate Partner.

The Clock Is Ticking: What the 2026 Business Property Relief Changes Mean for Succession Planning

For years, Business Property Relief (‘BPR’) has quietly underpinned the handover of family businesses across the UK.  It’s been the reason that many entrepreneurs could pass their company to their children without a hefty inheritance tax bill landing on the doorstep.

Unfortunately, that’s all about to change.

From 6 April 2026, the Government is overhauling the BPR rules and the effects could be dramatic for family companies, and owner-managed businesses alike.

At Burnetts, we’re already helping clients prepare for what could be one of the most significant shifts in inheritance tax planning for decades.

What’s Changing?

Under the current system, qualifying business can receive up to 100% relief from inheritance tax, no matter their value.

From 2026 onwards, that relief will be capped:

  • Each individual (and trust) will get a £1 million “full relief allowance.”
  • Any value above that will receive only 50% relief, meaning a potential 20% effective tax rate on the excess.
  • Shares traded on AIM and other unrecognised exchanges will lose their 100% status.
  • And trusts — a cornerstone of many family business plans — will face tighter restrictions and new charges.

In simple terms: the bigger your business, the bigger your future tax exposure.

Why It Matters

Many family businesses are asset-rich but cash-poor. If inheritance tax suddenly applies to a large portion of the estate, heirs could face difficult decisions — including selling shares or property to pay the tax bill.

For example, a £4 million company currently passes on tax-free. Under the new rules, only £1 million would be fully relieved, with the remaining £3 million taxed at 20%. That’s £600,000 due to HMRC — often just when a family is least prepared to pay it.

This isn’t just a tax reform. It’s a succession challenge.  It affects control, continuity and the long-term future of family run enterprises.

What Business Owners Should Do Now

With less than a year to go, there’s a clear message: start planning early.

Here’s what to consider:

  1. Review your current succession plan – Many wills, trusts, and shareholder agreements were drafted on the assumption of full BPR. That assumption may no longer hold.
  2. Get a current business valuation – You can’t plan effectively without knowing what your business is worth under the new rules.
  3. Think about lifetime transfers before April 2026 – Some gifts or restructures made before the deadline could still benefit from the old regime.
  4. Review your share structure – Different share classes (such as non-voting or growth shares) may help spread ownership and use multiple allowances.
  5. Plan for liquidity – Life insurance, reserves, or external funding might be needed to cover future tax bills.
  6. Talk to your advisers – Coordinating legal, tax, and financial advice early will help you protect value and family control.

Our View

At Burnetts, we’re encouraging clients to look ahead — not just to the new rules, but to what they mean for family control, and long-term strategy.

The new BPR regime isn’t necessarily bad news, but it does demand careful, proactive planning. The sooner you start, the more options you’ll have.

If your business could exceed £1 million in value, now is the time to take stock. Waiting until 2026 could mean losing valuable opportunities that still exist today.

For bespoke advice on succession planning and the upcoming BPR reforms, just get in touch and we’ll be happy to help.