Planning for succession before the April 2026 BPR and APR changes

What is changing for Business Property Relief in 2026?

From April 2026 only the first £1 million of combined Business Property Relief and Agricultural Property Relief per person will qualify for 100%. Any value above that will receive 50%. AIM shares will also fall to 50% relief. These changes mean relief will no longer eliminate the full value of many trading businesses or farms.

What changed for APR and BPR in the Autumn 2025 Budget?

The Autumn 2025 Budget introduced one important adjustment. The new £1 million APR and BPR allowance will be transferable between spouses, removing the need for complex will drafting that families had previously been considering. The underlying cap remains and no further easing was introduced.

How might these changes affect succession planning?

A business worth £5 million that currently attracts 100% relief could face an £800,000 inheritance tax charge under the new rules. Extracting dividends to meet this liability introduces further tax, increasing the real cash burden. There may be ways to avoid a dry dividend tax charge using share buy backs but that depends on planning and the position. Some estates may also struggle with liquidity where there is no natural market for the shares, noting it may be possible to spread the inheritance tax over 10 years with certain claims. Farming businesses may feel particular pressure, as the value of land and machinery can exceed £1 million long before profitability does.

What ownership questions should families now explore?

Because the £1 million allowance cannot be shared without planning, families may need to review who holds shares and how wills are structured. Lifetime transfers can still be effective, but it will be important to consider capital gains tax rules (it may be possible to gift capital gains tax free if reliefs apply) and how gifting affects inheritance tax.

Can trusts or family investment companies support succession aims?

Trusts remain an option but must be carefully handled. Settlors cannot benefit, excepted assets may create charges on entry and trusts carry their own periodic charges. From 2026 business assets within trusts will receive 100% relief only up to £1 million, with a 3% ten year charge on excess value if APR and BPR applies.

Family investment companies allow parents to retain control while passing future growth to the next generation through structured share classes. They rely on accurate valuation and careful design but can provide a long term holding framework.

Why is valuation now central to succession planning?

Valuation underpins almost every planning choice. Adjustments may be needed for surplus cash, non commercial remuneration or investment activity, and HMRC challenges are increasingly common. Trustees also have a duty to understand the value of the assets they hold, making up to date valuations essential.

What should business owners consider next?

With April 2026 approaching, the priority is understanding exposure under the new rules, how the £1 million cap interacts with existing structures and whether current plans still meet long term aims or changes need to be made to alleviate the inheritance tax burden. Planning cannot remove the changes, but it can help ensure reliefs are used efficiently and future liabilities remain manageable.

Ready to think through your own succession position?

If you would like tailored support or simply want to understand how the April 2026 BPR and APR changes may affect your business, please contact Gravita. Our specialists can help you assess your options and approach succession with clarity and confidence.