Business Relief, often called business property relief, cuts the value of a business or its assets for Inheritance Tax. For deaths on or after 6 April 2026, 100% relief is capped at £2.5 million of business and agricultural property, with 50% relief above that and on AIM shares. Enter the values to see the relief and what is left to tax.
Deaths on or after 6 April 2026
Business Relief reduces the value of a business or its assets when Inheritance Tax is worked out. For deaths on or after 6 April 2026, 100% relief is capped at £2.5 million for qualifying business and agricultural property combined, and qualifying property above the cap gets 50% relief. The allowance is reduced by any 100% relief given on gifts in the 7 years before the death.
| Property | Relief |
|---|---|
| A business or interest in a business, or unlisted company shares, within the allowance | 100% |
| The same property above the £2.5 million allowance | 50% |
| Shares on markets not classed as listed, such as AIM | 50% |
| Shares controlling more than 50% of the votes in a listed company | 50% |
| Land, buildings or machinery used in a business the person controlled or was a partner in | 50% |
The government first announced a £1 million allowance at the Autumn Budget 2024 and raised it to £2.5 million on 23 December 2025, before the change took effect. If an estate's 100% property is worth more than its allowance, the allowance is shared across the business and agricultural property in proportion to their values.
If the person who died had a spouse or civil partner who died before them, any unused allowance can be transferred, so the total can reach £5 million. If the first death was before 6 April 2026, the full £2.5 million can be transferred, even if that estate claimed Business Relief. The transfer must be claimed by the later of 4 years after the death and 6 months after the executor or administrator started acting. HMRC points out that, with the nil-rate bands, two people could pass on up to £5.65 million tax-free between them.
The person who died must have owned the business or asset for at least 2 years. There's no relief if the business mainly deals in securities, stocks or shares, land or buildings, or in making or holding investments, if it's a not-for-profit organisation, or, with some exceptions, if it's being sold or wound up. An asset must have been used mainly for the business in the 2 years before it was passed on, and property that also qualifies for agricultural relief gets that relief instead.
Relief can also apply to business property given away during someone's lifetime, as long as the person receiving it keeps it as a going concern until the donor dies. Gifts made more than 7 years before death don't count towards the estate. The new rules also cover gifts made on or after 30 October 2024 where the donor dies on or after 6 April 2026 and within 7 years of the gift.
Work out the tax on the rest of the estate with the Inheritance Tax calculator, check lifetime gifts with the Inheritance Tax gift calculator, and estimate estate administration with the probate cost calculator. If the business is being sold rather than passed on, see the Business Asset Disposal Relief calculator.
For deaths on or after 6 April 2026, 100% relief is capped at £2.5 million for qualifying business and agricultural property combined. Qualifying property above that gets 50% relief.
£2.5 million. The government first announced £1 million at the Autumn Budget 2024 and raised it to £2.5 million on 23 December 2025, before the change took effect on 6 April 2026.
Yes, but at 50%. Shares traded on markets that don't meet HMRC's definition of listed, such as AIM, get 50% relief in all circumstances, so they don't get 100% relief within the allowance.
Yes. Any unused allowance of a spouse or civil partner who died first can be transferred, up to £5 million in total. If they died before 6 April 2026, the full £2.5 million can be transferred.
At least 2 years before the death, or before the date of a lifetime gift.
Tax on property that qualifies for business or agricultural property relief can be paid in equal annual instalments over 10 years, interest-free.
