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Preparing clients for Business Property Relief

06/10/2025

Business Property Relief (BPR) saw some important changes in April 2026. While many business clients may be unaffected, others could see a shift in how Inheritance Tax (IHT) applies when their estate is valued – making it a good opportunity for advisers to start the conversation on business protection.

What’s changed?

BPR can reduce or remove the value of a business from the Inheritance Tax calculation. In many cases, this means a family business can be passed down either completely IHT free or at a reduced rate without the family of the deceased having to sell the business to pay the tax.

But from 6 April 2026, the scope narrowed which may impact the advice you give your business clients. Headline changes include:

Infographic with the words: Business property valued over 2.5 million is liable for IHT at 20%
  • The previous 100% relief is now capped at £2.5 million on a combined value of qualifying business property.
  • Any value that exceeds £2.5 million will qualify for 50% relief, meaning it will be liable for IHT at an effective rate of 20%.
  • Shares in businesses not listed on recognised stock exchanges (such as AIM) will only receive 50% relief in all circumstances.
  • The £2.5 million allowance is transferable between spouses or civil partners.


Why this matters for financial advisers

These changes mean that many family businesses once protected by BPR could now face substantial IHT liabilities on death, often without the funds required to pay them.

“It’s a great opportunity for advisers to meet with clients and review whether their business still qualifies for BPR, what it means for the value of their estate and how they can plan ahead to ensure family members aren’t left with a large tax bill.”
Marcus PrimhakNational Account Manager

The role of business protection

Business protection can play a vital role in helping business owners prepare. The right cover ensures IHT can be paid, and ownership transitions are managed smoothly, without disrupting the business itself. Options include:

  • Share & Partnership Protection provides the funds for surviving business owners or family members to buy out the deceased's share, protecting both the business and the estate.
  • Relevant Life Cover offers a tax-efficient way for a business to provide individual life cover for business owners or key employees, with benefits paid outside of the taxable estate.
  • Key Person Cover ensures the business has the funds to replace lost talent, cover recruitment costs or repay debts if a key individual dies.
  • Gift Inter Vivos, although a personal protection policy, is designed for clients who have gifted assets to someone and want to cover any inheritance tax liability, by offering a lump sum paid on death.

LV= offers the reassurance of a provider you can trust. Our strong underwriting delivers clear, fair outcomes for clients, and our flexible cover options mean you can shape protection around each client’s circumstances, the value of their business and their tax planning needs – giving them confidence that their loved ones and legacy will be protected when it matters most.

What's next

By starting the conversation, advisers can protect clients from unforeseen tax bills. For more information about LV= Business Protection, please contact your account manager today.

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