Act Now: Securing Business Property Relief Before the 6 April 2026 Deadline

12 September 2025 | posted in Business & corporate tax Inheritance tax & estate planning

The Autumn Budget announcements on 30 October 2024 introduced significant reforms to Inheritance Tax (IHT) reliefs, particularly Business Property Relief (BPR). These changes, due to take effect from 6 April 2026, will have a profound impact on business owners and shareholders in trading companies. With further potential changes to Capital Gains Tax (CGT) expected in the upcoming Autumn 2025 Budget, now is the time to act.

What’s changing?

From 6 April 2026, the government will cap 100% BPR and Agricultural Property Relief (APR) to the first £1 million of qualifying assets per individual. Any value above this threshold will only attract 50% relief, effectively subjecting the excess to a 20% IHT charge.

This is a major shift from the current regime, where qualifying business assets such as shares in unquoted trading companies can benefit from full 100% relief, often eliminating IHT altogether.

Why act now?

The key opportunity lies in the transitional window before 6 April 2026. Transfers of qualifying business assets into Discretionary Trusts before this date can still benefit from unrestricted 100% BPR, subject to certain conditions. This makes trusts a powerful tool for succession planning and tax mitigation.

However, there is a twist, rumours are circulating that the Autumn 2025 Budget may introduce restrictions on Capital Gains Tax (CGT) holdover relief, particularly for gifts into trust. If this happens, the ability to defer CGT on such transfers could be curtailed or removed altogether.

Trusts: Before or after the Budget?

Given the uncertainty, business owners face a strategic decision:

• Set up trusts before the Autumn 2025 Budget (to be held 26 November 2025). This could lock in both 100% BPR and CGT holdover relief, avoiding the risk of immediate CGT charges if the rules change.
  Or
• Wait until after the Budget but before 6 April 2026: This allows more time for planning but carries the risk that CGT holdover relief may no longer be available.

For many, the prudent course is to act before the Budget to hedge against both IHT and CGT risks.

Key considerations

• Valuation: Ensure accurate and up-to-date valuations of business assets to determine how much of the £1 million BPR cap may be used.
• Trust Structure: Discretionary Trusts remain a flexible vehicle, but care must be taken to avoid anti-avoidance rules and ensure the trust qualifies for relief.
• Multiple Trusts: The government has confirmed it will not proceed with anti-fragmentation rules, meaning multiple trusts may still be used to maximise relief though each will share the £1 million cap if created after 30 October 2024.
• CGT Holdover: Currently available for gifts of qualifying business assets into trust, but this could change. If Capital Gains Tax becomes payable on such gifts, the tax cost could be significant.
• Life Insurance: For those unable or unwilling to make lifetime gifts, life insurance may be a useful tool to fund future IHT liabilities, however, the costs may be significantly higher.

What should business owners do?

• Review your estate and succession plans now.
• Consider making gifts into trust before the Autumn 2025 Budget to secure both BPR and CGT holdover relief.
• Take professional advice to ensure compliance and optimal structuring.

The window for action is narrowing. With the dual threat of reduced BPR and potential CGT changes, proactive planning is essential.

Need further help or advice?

If these changes affect you or your clients and you’d like to discuss options, please get in touch.