Business Relief for Inheritance Tax
What qualifies for Business Relief
What qualifies for 100% relief
As the executor of a will or administrator of an estate, you can get 100% Business Relief on property that is:
- a business or interest in a business
- shares in an unlisted company
Deaths on or after 6 April 2026
100% relief is capped at £2.5 million for qualifying business or agricultural property. This includes business or agricultural property held in trust. How the relief works depends on the type of trust. Read chapter IHTM25550 of the Inheritance Tax Manual for more details.
You can work out how to allocate (also known as apportion) Agricultural and Business Relief across the £2.5 million allowance.
Transferring unused allowances from a spouse or civil partner
If the person who died had a spouse or civil partner who died before them, you can transfer any unused allowance from their estate. This could make the allowance up to £5 million.
You must claim this transferred allowance by the later of:
- 4 years after the death of the person whose estate you’re representing
- 6 months after you started your role as an executor or administrator
If the spouse or civil partner died before 6 April 2026, the full £2.5 million allowance can be transferred, even if their estate has already claimed Business Relief.
What qualifies for 50% relief
You can get 50% Business Relief on:
- qualifying property above the £2.5 million allowance
- shares traded on markets that do not meet HM Revenue and Custom’s definition of ‘listed’, such as the Alternative Investment Market
- shares controlling more than 50% of the voting rights in a listed company
- land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled
- land, buildings or machinery used in the business and held in a trust that it has the right to benefit from
You can only get relief if the deceased owned the business or asset for at least 2 years before they died.
What does not qualify for Business Relief
You cannot claim Business Relief if the business:
- mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments
- is a not-for-profit organisation
- is being sold, unless the sale is to a company that will carry on the business and the estate will be paid mainly in shares of that company
- is being wound up, unless this is part of a process to allow the business of the company to carry on
You cannot claim Business Relief on an asset if it:
- also qualifies for Agricultural Relief
- was not used mainly for business in the 2 years before it was either passed on as a gift or as part of the will
- is not needed for future use in the business
If part of a non-qualifying asset is used in the business, that part might qualify for Business Relief.
Example
If you use one room in a building as a shop and the other rooms are used as your home, the shop will qualify for Business Relief, but the rooms will not.
Relief for agricultural property
You may be able to get Business Relief on a transfer of agricultural property (for example, farmland, buildings or farm equipment) which is not eligible for Agricultural Relief.