Posted: 20 / 12 / 2024

Article by: David Evans, Head of Private Clients
Image: Renan Katayama, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

During the Budget last month, the UK government announced significant changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) as part of its inheritance tax reforms.

These changes, set to take effect from 6 April 2026, aim to create a fairer system while supporting family-owned businesses and farms.

Key Changes to BPR

1. Relief Threshold Adjustments:

  • The current 100% relief will remain in place for the first £1 million of combined agricultural and business property.
  • Beyond this threshold, relief will reduce to 50%.

2. Impact on Non-Listed Shares:

  • AIM-listed shares will now qualify for 50% relief only, regardless of the £1 million threshold.

3. No Immediate Changes to Qualification Criteria:

  • The basic qualifying conditions for BPR continue to focus on active trading businesses rather than investment assets.

Implications for Business Owners

These reforms could significantly affect succession planning for business owners, particularly those with larger estates or investments in AIM-listed shares. The reduction in relief above £1 million and changes to share treatment may result in higher inheritance tax liabilities, making strategic planning more critical than ever.

Action Steps

  • Reassess Valuations: Determine whether your business or agricultural assets exceed the £1 million threshold.
  • Review Ownership Structures: Consider how the changes to AIM shares could affect succession plans.
  • Plan for Reduced Relief: Collaborate with advisors to explore alternatives, such as lifetime gifts or trusts, to mitigate potential tax burdens.

The government intends to conduct a technical consultation in early 2025, providing further clarity on these changes. Staying informed and proactive will be key for navigating these reforms effectively.

How We Can Help

If you’re concerned about how these changes might affect your business or estate, now is the time to act. At Sedulo, we can:

  • Assess your eligibility for relief under the new rules.
  • Explore alternative planning strategies to mitigate tax liabilities.
  • Ensure your succession plans remain efficient and robust.

For more information or tailored advice, please get in touch. We’re here to help you navigate these changes and safeguard your business for the future.