Is there really a £2.5m cap on BPR and APR?

No. The official Autumn Budget 2024 wording describes a £1m 100 percent relief threshold and 50 percent relief above it. Some commentary has used "£2.5m" as shorthand for the point at which the relief treatment materially changes, but the £1m and 50 percent figures are the figures in the legislation. Always check GOV.UK for the current position before relying on a number from a headline.

Does this mean my £3.5m business will pay Inheritance Tax on the full value?

No. The first £1m of qualifying business property still attracts 100 percent relief. Only the value above £1m is partly relieved (50 percent). The standard £325,000 nil-rate band still applies. The spouse or civil partner exemption still applies, and the £175,000 residence nil-rate band still applies where the conditions are met. The worked example on the main page shows how the figures combine for one set of assumptions. The real number for any estate depends on ownership, valuation, debts, lifetime gifts and the wider family situation.

I own AIM shares. How is the new rule different for me?

Qualifying shares designated as "not listed" on a recognised stock exchange, including AIM shares, receive 50 percent Business Property Relief in all circumstances. There is no £1m 100 percent slice for these shares. Source: Autumn Budget 2024, GOV.UK.

Is this financial guidance or financial advice?

This page is financial guidance. It explains the rule change in plain English and points to the next step. It is not regulated financial advice. For decisions about ownership, lifetime gifting, trusts, business succession, or eligibility for BPR and APR, the right next step is a regulated financial adviser plus a solicitor or tax adviser experienced in business succession and Inheritance Tax.

What should I do before the October 2026 Budget?

The single most useful step is to get the numbers and the documents in one place: a current open-market valuation, a list of every asset marked as business, agricultural, AIM, investment, property, pension, cash or debt, the latest will and shareholder agreement, and any prior IHT advice. Take the pack to a regulated adviser and a solicitor or tax adviser. The exact decision can wait, but the preparation cannot. The Budget may change the picture further, and the prepared client is the one who can act quickly.

Educational use only. Not financial, investment, tax or legal advice.

3 August 2026 Syd Lawrence

You Own a Business or Farm Worth More Than £1m. The Inheritance Tax Rules Changed in April 2026.

Q: What changed about Business Property Relief and Agricultural Property Relief on 6 April 2026?

From 6 April 2026, 100 percent Business Property Relief and Agricultural Property Relief continues on the first £1m of combined qualifying business and agricultural property. Above £1m, the relief rate is 50 percent, not 100 percent. Qualifying "not listed" shares, including AIM shares, receive 50 percent relief in all circumstances. The standard Inheritance Tax allowances (£325,000 nil-rate band and £175,000 residence nil-rate band) are unchanged. Source: Autumn Budget 2024, GOV.UK.

Q: Where can I find a quick estimate of my Inheritance Tax exposure?

The Delphina inheritance planning check is a starting point for a first-pass estimate. It does not model BPR or APR eligibility, which is fact-specific, but it will show the headline number on the rest of the estate. The right conversation about BPR and APR is with a regulated adviser.

100 percent relief on the first £1m of qualifying assets. 50 percent above £1m. A separate 50 percent rule for AIM and other not-listed shares. What it means, who it affects, and what to gather before the October Budget.

Syd Lawrence

CEO & Co-founder at Delphina

Syd got fed up with being kept confused by the UK personal finance industry. So he built the tool he wished existed. Qualified to provide financial advice, prefers to provide financial clarity. No agenda. Just someone who finally got clear and wanted everyone else to be able to too.

The 30-second version

From 6 April 2026, 100 percent Business Property Relief (BPR) and Agricultural Property Relief (APR) continues for the first £1m of combined qualifying business and agricultural property.
Above that £1m, the relief rate is 50 percent. Only half of the value above £1m is relieved. Source: Autumn Budget 2024, GOV.UK.
Qualifying shares designated as "not listed" on a recognised stock exchange, including AIM shares, receive 50 percent relief in all circumstances. Source: Autumn Budget 2024, GOV.UK.
The standard IHT rate is 40 percent on the taxable amount. The nil-rate band remains £325,000 and the residence nil-rate band remains £175,000, both frozen to 5 April 2030. Source: GOV.UK.
This page is financial guidance, not financial advice. Eligibility for BPR and APR is fact-specific. The right next step is a regulated adviser plus a solicitor or tax adviser.

You built a business worth £3.5m. Maybe an engineering firm, a recruitment agency, a chain of shops, a farm that's been in the family for three generations. You have spent twenty years or more getting it there. The plan was always that it would pass on intact. That plan may now be wrong. The rules around Business Property Relief and Agricultural Property Relief changed on 6 April 2026. The change is not in the detail. The change is in the headline number.

This page is the case for treating that change seriously, in the next four weeks, before the 28 October 2026 Autumn Budget. It is the tactical counterpart to the wider IHT planning tools round-up. The page is the rule change and the one monthly action. Read them in either order.

The assumption many families made

For decades, a family business or a working farm could pass from one generation to the next with little or no Inheritance Tax to pay, provided the business was a genuine trading business and the owner held it for at least two years. Most advisers called it "the family business exemption." Many families relied on it without checking the small print.

The April 2026 reform did not remove BPR or APR. It changed the rate. The first £1m of combined qualifying business and agricultural property still attracts 100 percent relief. Above £1m, the relief is now 50 percent, not 100 percent. The same 50 percent rule applies in all circumstances to AIM shares and other "not listed" qualifying shares. The change is narrow on paper. For a £3.5m business, the numbers are not narrow at all.

BPR and APR, in plain English

Business Property Relief (BPR) is the Inheritance Tax relief that applies to certain business assets. It covers shares in an unlisted trading company, a sole trade or partnership interest, and certain business property such as a building used by the business. Source: HMRC Inheritance Tax Manual.

Agricultural Property Relief (APR) is the equivalent for qualifying agricultural property. It covers the agricultural value of land and certain farm buildings, depending on how the land is used and who occupies it.

The word "qualifying" matters. Not every asset that looks like a business or a farm qualifies. A trading company that also holds large investment portfolios, a let farm that does not pass the occupancy test, or a personal service company can all lose relief. Source: HMRC Inheritance Tax Manual. The relief is not automatic. The relief is checked.

BPR and APR are also not the same as the ordinary Inheritance Tax allowances. The £325,000 nil-rate band and the £175,000 residence nil-rate band are still there, with the same conditions. BPR and APR sit on top of them. Source: GOV.UK Inheritance Tax overview.

What changed on 6 April 2026

The headline numbers, in the order the rules apply:

Asset or position	Treatment from 6 April 2026
First £1m of combined qualifying business and agricultural property	100 percent relief
Qualifying business and agricultural property above £1m	50 percent relief
Qualifying "not listed" shares, including AIM	50 percent relief in all circumstances
Standard IHT nil-rate band	£325,000 per person
Residence nil-rate band (where it applies)	£175,000 per person, tapered above £2m
Standard IHT rate on the taxable amount	40 percent

What this does not mean

It does not mean every business owner now owes 40 percent on the whole estate. The £1m 100 percent slice, the nil-rate band, the residence nil-rate band, the spouse or civil partner exemption, and any qualifying lifetime gifts all still apply.

It also does not mean every farm or every company automatically qualifies. Eligibility is checked against how the asset is held, how it is used, and who owns it. Source: HMRC Inheritance Tax Manual.

The worked example, with the new rules

Below is an illustrative example. It is not a forecast. It is not advice. The real number for any estate depends on ownership, valuation, debts, lifetime gifts, and the wider family situation.

Illustrative example

Assume a single estate, with no spouse or civil partner transfer available, no residence nil-rate band claimed in the first illustration, no debts, and no lifetime gifts:

£3.5m of qualifying business property
£500,000 of other assets

The maths

First £1m of qualifying business property: 100 percent relief. Value exposed: £0.
Remaining £2.5m of qualifying business property: 50 percent relief. Value exposed: £1.25m.
Other assets: £500,000 fully exposed before ordinary allowances.
Total value exposed before ordinary allowances: £1.75m.
Less £325,000 nil-rate band: £1.425m taxable.
At 40 percent, indicative IHT: £570,000.

That £570,000 sits in the same family balance sheet as the business itself. It is the number that changes if the ownership changes, if a lifetime gift is made, if the spouse exemption applies, if the residence nil-rate band is in scope, or if any of the assets do not in fact qualify.

A common misunderstanding is that a £2.5m business will be a £1m tax problem. The number is not a clean ratio. It depends on what the estate actually contains, which assets qualify, and how the ownership is structured. The example above shows a £570,000 figure for one set of assumptions. Change one assumption and the figure moves materially.

Who needs to pay attention first

The change is wide but the impact is not evenly spread. The situations that most need a closer look, in priority order:

1. A trading business or farm materially above £1m

Above £1m, every additional pound of qualifying value is half-relieved, not fully relieved. The exposure grows with the value.

2. A couple whose combined qualifying assets exceed £2m

First-death and second-death outcomes matter. The spouse or civil partner exemption can pass the unused £1m slice forward, but only if the will and the ownership are aligned.

3. An owner with material AIM or other not-listed shareholdings

The 50 percent rule applies in all circumstances. There is no £1m 100 percent slice for these shares.

4. A family with a trading company that also holds surplus cash or investment property

Mixed companies can lose part of their BPR. The investment element is not automatically protected.

5. Someone relying on BPR or APR without a current valuation

If the value has grown quietly over the last ten years, the qualifying value may be larger than the owner remembers.

The options that remain

The change is real. It is not the end of the conversation. The remaining routes are not guarantees, and they are not "loopholes." They are the standard tools an estate planner works with, applied to a different relief landscape. The next move is to know which apply to the reader's situation, and to know the cost and the trade-off of each.

Map the estate in one place. Business, agricultural, AIM, investment, property, pension, cash and debt values on one page, with the qualifying status of each line marked separately. Without the map, every later decision is guesswork.
Test eligibility, not just value. A £3m business is not a £3m BPR claim. The test is the holding, the use and the ownership. The evidence needs to exist before the claim is needed.
Review ownership. Joint ownership, family trusts and company structures can shift the qualifying picture. The right structure is the one that matches the family's intended outcome, not the one that matched the 2006 tax year.
Use the ordinary allowances properly. The £325,000 nil-rate band, the £175,000 residence nil-rate band (where the conditions are met), the spouse or civil partner exemption, and the 36 percent charitable rate each move the final number in different ways.
Consider lifetime gifting, carefully. Gifts can fall outside the estate after seven years, but gifts with reservation, failed gifts and the donor's own future need for the money all change the practical outcome. Source: GOV.UK Inheritance Tax.
Look at succession and structure, not just tax. A partial sale, a management buyout, a share transfer to the next generation or a re-organisation can change both the family's practical security and the Inheritance Tax position. These are commercial decisions first and tax decisions second.
Do not rush before a Budget. Speculation about further changes in the 28 October 2026 Autumn Budget is not a reason to act on the rumour. It is a reason to gather the numbers and the documents so any change can be acted on quickly when it is confirmed.

What to do this month

One pack, one shelf, one adviser conversation

Before 22 September 2026, get the numbers and the documents in one place. The exact decision can wait. The preparation cannot.

Get a current open-market valuation for the business, farm or shareholding. The valuation used for a 2016 sale is not the valuation for a 2026 estate.
List every asset the estate contains and mark each as business, agricultural, AIM, investment, property, pension, cash or debt. One page. One column per type.
Find the last will, the shareholder or partnership agreement, the trust documents, and any prior IHT advice. These are the inputs the adviser will need.
Write down who should receive the business and what happens if the owner dies before the handover. The succession plan and the tax plan are the same conversation.
Take the pack to a regulated financial adviser, and a solicitor or tax adviser experienced in business succession and IHT. Verify their registration on the HMRC MMTAR register if tax advice is being given.

For a first-pass estimate of the IHT exposure on the rest of the estate, the inheritance planning check is a starting point. It does not model BPR and APR eligibility, which is fact-specific, but it will show the headline number. For the wider picture of whether the rest of the financial position is on track, see am I on track financially.

A note on this page

Rules last checked against GOV.UK on 3 August 2026 (Autumn Budget 2024; GOV.UK Inheritance Tax overview; HMRC Inheritance Tax Manual). The 28 October 2026 Autumn Budget may change the picture further. The page is financial guidance, not financial advice. Eligibility for BPR and APR is fact-specific and the right next step is a regulated adviser plus a solicitor or tax adviser.