Changes to BPR
From 6 April 2026, an upper value limit will be applied to those assets that are eligible for BPR. After that date, only the first £1 million of qualifying business property, which includes unquoted shares in a family company, will be eligible for 100% relief from IHT. Above this level, the available relief will be reduced to 50%, meaning there would be an effective IHT rate of 20% after the first £1 million.
Comment
This is a significant change for family businesses and the reforms to BPR have attracted some criticism. Sir James Dyson has been quoted as saying the Government’s changes will kill off family businesses.
Contrary to the aims behind BPR, there will be a greater risk of businesses having to be sold or liquidated after a business owner’s death in order to fund the new IHT liabilities that will arise. Professional advice will need to be taken and succession plans put in place to ensure businesses and family wealth can be passed down to future generations.
Given the changes will not come into effect until April 2026, now is a sensible time for family businesses to take action. BPR is available for transfers made during the life of the transferor, as well as those made through a Will after death. Family businesses owners should therefore also consider whether any transfers might be made prior to April 2026 in order to take advantage of the current relief available.
