Business Property Relief (BPR) Explained

Q: Do AIM shares qualify for business property relief?

Shares traded on markets HMRC does not treat as listed, such as the Alternative Investment Market, can qualify, though from 6 April 2026 they are generally relieved at 50% rather than 100% (gov.uk, as at July 2026, subject to change). The underlying company still has to be a qualifying trading business. Because AIM investing carries its own risks, this is an area where many speak to an FCA-authorised adviser.

What is business property relief?

Business property relief is a relief that reduces the value of qualifying business property when working out inheritance tax, either by 100% or by 50% (gov.uk/business-relief-inheritance-tax, as at July 2026, subject to change). It can apply to a trading business, an interest in one, or certain business assets, and it is claimed by the personal representatives when the estate is assessed. The aim is to help a genuine business pass on without a forced sale to meet the tax.

The two relief rates

There are two rates of business property relief, 100% and 50%, and which one applies depends on the type of asset and how it was owned. Broadly, whole businesses and unlisted shareholdings tend to attract 100%, while assets used by a business but owned personally, and certain shareholdings, attract 50% (gov.uk, as at July 2026, subject to change).

Rate	Typically applies to (as at July 2026)
100%	A business or an interest in a business, and shares in an unlisted company (subject to the £2.5m cap from 6 April 2026)
50%	Qualifying property above the £2.5m allowance; shares on markets HMRC does not treat as "listed", such as the Alternative Investment Market; shares giving control of more than 50% of the voting rights in a listed company; and land, buildings or machinery owned personally but used in the business the deceased was a partner in or controlled

Rate

Typically applies to (as at July 2026)

100%

A business or an interest in a business, and shares in an unlisted company (subject to the £2.5m cap from 6 April 2026)

50%

Qualifying property above the £2.5m allowance; shares on markets HMRC does not treat as "listed", such as the Alternative Investment Market; shares giving control of more than 50% of the voting rights in a listed company; and land, buildings or machinery owned personally but used in the business the deceased was a partner in or controlled

What qualifies, and what does not

Not every business qualifies. Relief is generally aimed at trading businesses rather than investment ones. A business does not qualify if it mainly deals in securities, stocks or shares, land or buildings, or in making or holding investments, and relief is also refused for a not-for-profit organisation or a business being wound up (gov.uk, as at July 2026, subject to change).

Often qualifies. A trading company, a partnership share, a sole trade, and unlisted trading company shares.

Restricted or excluded. Businesses mainly dealing in investments, land or shares; assets not used mainly for the business in the two years before the transfer; and assets held for a future non-business use.

Because the line between a trading business and an investment one can be fine, this is an area where many people choose to take advice from a solicitor, a STEP practitioner or an accountant before relying on the relief.

The two-year ownership rule

To qualify for business property relief, the deceased generally must have owned the business or asset for at least two years before they died (gov.uk, as at July 2026, subject to change). This is one reason planning tends to be considered earlier rather than left to the last moment, because a recently acquired asset may not yet meet the ownership test. There are limited exceptions, for example where an asset replaced other qualifying property, which a professional can check against the current rules.

The £2.5m cap from April 2026

From 6 April 2026 the 100% rate is no longer unlimited. For deaths on or after that date, 100% relief is capped at £2.5 million for qualifying business or agricultural property combined, and qualifying value above that cap is generally relieved at 50% instead (gov.uk, as at July 2026, subject to change). An unused allowance can transfer between spouses and civil partners, which can raise the combined figure to as much as £5 million across a couple.

What the cap changes. Before 6 April 2026, a qualifying trading business could often pass with 100% relief regardless of size. From that date the first £2.5 million of combined qualifying business and agricultural property is relieved at 100%, and the excess drops to 50% relief (gov.uk, as at July 2026, subject to change). Whether that transferable allowance applies depends on individual circumstances.

A worked example

Suppose someone dies after 6 April 2026 owning a qualifying trading company worth £4,000,000, held for more than two years. The first £2.5 million of qualifying value can attract 100% relief, so it is taken out of the taxable estate. The remaining £1.5 million attracts 50% relief, so £750,000 of that is relieved and £750,000 stays in the estate for inheritance tax at the standard 40% rate (gov.uk/inheritance-tax, as at July 2026, subject to change).

This is a simplified illustration that ignores the nil-rate band, other assets, and any transferable allowance. Every estate is different, so it is general information rather than a calculation for any particular case.

How BPR sits alongside agricultural property relief

Business property relief and agricultural property relief are two separate reliefs that can overlap, particularly for a working farm run as a business. From 6 April 2026 they share a single £2.5 million allowance for 100% relief, so the two reliefs can no longer each give unlimited 100% cover (gov.uk, as at July 2026, subject to change). If a farming estate might use both, it can be worth discussing the interaction with a qualified professional. Our agricultural property relief guide covers the farming side in more detail, and our guide on how to reduce inheritance tax sets the reliefs in the wider planning context.

Scotland and Northern Ireland

Inheritance tax, including business property relief, is a UK-wide tax set by HMRC, so the relief rates and the two-year rule apply across England, Wales, Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs between the nations is the surrounding succession and administration law. Scotland has its own succession rules and uses confirmation rather than probate, and Northern Ireland has a separate but broadly similar system to England and Wales. Where an estate touches more than one jurisdiction, taking local advice can help.

Frequently asked questions

How much is business property relief worth?

Business property relief reduces the taxable value of qualifying business property by either 100% or 50%, depending on the asset and how it was held (gov.uk, as at July 2026, subject to change). For deaths on or after 6 April 2026, the 100% rate is capped at £2.5 million of combined qualifying business and agricultural property, with value above that generally relieved at 50%.

What is the two-year rule for business property relief?

The deceased generally must have owned the business or asset for at least two years before death for the relief to apply (gov.uk, as at July 2026, subject to change). Limited exceptions exist, for example where a qualifying asset replaced another. Because timing matters, many people choose to consider this well before it is needed rather than at the last moment.

Do AIM shares qualify for business property relief?

Shares traded on markets HMRC does not treat as "listed", such as the Alternative Investment Market, can qualify, though from 6 April 2026 they are generally relieved at 50% rather than 100% (gov.uk, as at July 2026, subject to change). The underlying company still has to be a qualifying trading business. Because AIM investing carries its own risks, this is an area where many speak to an FCA-authorised adviser.

What does not qualify for business property relief?

A business does not qualify if it mainly deals in securities, stocks or shares, land or buildings, or in making or holding investments, and relief is also refused for a not-for-profit body or a business being wound up (gov.uk, as at July 2026, subject to change). Assets not used mainly for the business in the two years before the transfer can also be excluded.

Is business property relief changing in 2026?

Yes. For deaths on or after 6 April 2026, 100% relief is capped at £2.5 million for combined qualifying business and agricultural property, and value above the cap is generally relieved at 50% (gov.uk, as at July 2026, subject to change). An unused allowance can transfer between spouses and civil partners. The detail depends on circumstances, so it can be worth discussing with a qualified professional.

Do I need advice to claim business property relief?

Claiming is not automatic, and whether an asset qualifies can turn on fine points such as whether a business is trading or investment in nature. Because getting it wrong can be costly, one option many consider is taking advice from a solicitor, a STEP practitioner or an accountant, who can check the position against the current rules before an estate relies on the relief.

About Fairchild Oldfield

Fairchild Oldfield is an estate planning specialist with over a decade of experience helping families with wills, trusts and later-life planning, including business and farming estates.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances. See also our estate planning guide or the neutral contact page to arrange a conversation.