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Why Business Property Relief exists

Business Property Relief (BPR) has come a long way since it was first introduced in the 1976 Finance Act. Then, its main aim was to ensure that after the death of the owner, a family-owned business could survive as a trading entity, without having to be sold or broken up to pay an inheritance tax liability. Over time, successive governments recognised the value of encouraging people to invest in trading businesses regardless of whether they run the business themselves.

BPR is a well-established relief dating back 40 years, however, you should keep in mind that the value of an investment may go down as well as up and investors may not get back what they originally put in. Tax rules may change in the future, and the value of tax reliefs depends on your individual circumstances.

The types of business that typically qualify for BPR

Not every investment or interest in a business will qualify for BPR, but BPR will typically be available for:

  • Shares in an unquoted qualifying company, even a minority holding
  • Shares in a qualifying company listed on the Alternative Investment Market (AIM)
  • An unincorporated qualifying trading business, or an interest in one – a partnership, for example.

Most recently, the UK Government’s decision in 2013 to allow AIM-listed shares to be held within Individual Savings Accounts (ISAs) means that investors can now hold BPR-qualifying shares within a tax-efficient ISA wrapper.

Key benefits of a BPR-qualifying investment


  • Speed: Making gifts or settling assets into trust usually takes seven years to become completely free from inheritance tax. But an investment in a BPR-qualifying company can be passed down to beneficiaries free of inheritance tax on the death of the shareholder provided it has been held for at least two years at that time.
  • Access and control: Owning BPR-qualifying shares allows a client’s wealth to stay in their own name.
  • BPR-qualifying investments do not use the nil-rate band: This means investors can plan for their nil-rate band allowance to reduce the inheritance tax charge on less liquid assets, such as their home, which are otherwise difficult to place outside of the estate for tax purposes.


What are the risks?


  • Capital is at risk: To qualify for BPR, a company must not be listed on a main stock exchange. Such companies could fall in value, and investors may get back less than they invest.
  • Tax rules and reliefs can change: Tax rules could change in the future. The value of tax reliefs will depend on an investor’s personal circumstances. There cannot be any guarantee that companies that qualify today will remain BPR qualifying in the future.
  • Shares could be more volatile and less liquid: Investments in unquoted companies or those quoted on AIM can fall or rise more sharply than shares in larger companies listed on the main market of the London Stock Exchange, and may be harder to sell.

    Hear from one of our investment managers

    🡆 Read our ‘Clients who could benefit from investments that qualify for BPR‘ guide.