Proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) announced in the October 2024 Budget have made plenty of headlines in the UK, but mainly in relation to agricultural and farming businesses. This has come off the back of the farming community mobilising itself incredibly quickly and setting up a number of high-profile protests and other events. These produced powerful images of Whitehall packed with tractors and produced media soundbites from perhaps the highest profile farmer of them all, Jeremy Clarkson.
With all that publicity, you might be forgiven for thinking this is purely a farming issue, but this couldn’t be further from the case. For many of the UK’s businesses, and particularly family businesses, the impact of the changes could be substantial and long-lasting. At Gorvins, we work closely with owner managed businesses and family-owned firms across all sectors, and these changes raise important questions about succession planning, business viability and long-term strategy.
In this short blog, we’re going to examine the changes, what they mean for you and your business and what some early reports are saying about the long-term effects.
What is Business Property Relief?
Business Property Relief has been a long-standing feature of the UK tax system for well over 50 years and is designed to support business continuity across generations. In essence, it allows qualifying business assets — including shares in private trading (but not investment) companies — to be passed on, either during a shareholder’s lifetime or upon their death with relief from Inheritance Tax (IHT).
Previously, this relief was available at 100% for qualifying businesses, helping families avoid the need to break up or sell the business simply to pay the tax bill, thus allowing the businesses to be passed down from one generation to the next.
What’s changing?
From April 2026, the Government intends to introduce a £1 million cap on the value of business assets that can benefit from 100% BPR. Anything above that threshold would only qualify for 50% relief.
By way of illustration, if a shareholder holds shares in a trading company worth £3m, as things stand at present, no IHT would be payable on those shares on their death. Under the proposed changes from April 2026, the first £1m would be IHT free with an effective IHT rate of 20% (i.e. a 50% discount on the 40% IHT rate) applying for everything over £1m, This means the IHT bill in such a situation would be £400,000 (i.e. 20% of the excess £2m).
This marks a significant departure from previous policy and introduces a new level of complexity, particularly for businesses with assets tied up in long-term investment, property or stock.
With the policy, the government aims to raise revenue and ensure that relief is more targeted to smaller firms.
The economic Impact
Family Business UK (FBUK), supported by analysis from CBI Economics, recently published a detailed report into the likely consequences of this policy which was compiled with the support of 32 trade associations and involved in excess of 4,150 businesses.
The findings are stark:
· Over 60% of businesses are anticipating reducing investment by 15.5% on average
· 23% of businesses have already reduced their headcount and support for their local communities due to the BPR and APR changes
· More than 208,500 jobs could be lost from family businesses and their supply chains
· £14.86 billion in economic activity (Gross Value Added) is at risk (almost equivalent to the value of the UK motor vehicle manufacturing industry)
· The Government could face a net fiscal loss of £1.87 billion over the lifetime of this Parliament rather than the £1.4 billion gain it had forecast. In other words, the policy may not only fail to deliver the additional tax revenue it aims for, but actively cost the Treasury money as reduced business investment and job losses lead to a lower overall tax receipt for the government.
According to the research, many family businesses expect to respond to the increased tax burden by cutting investment, reducing headcount, reducing their support for their local communities or in 12% of cases, even selling or closing the business. These are not theoretical risks, they’re practical choices business owners may be forced to make.
Why this matters to family businesses
There’s a common misconception that family business owners are sitting on liquid wealth. In truth, the vast majority of their wealth is often tied up in the business itself — invested in assets, people, and future growth. Under the new regime, these owners may need to extract funds from the business to cover future tax liabilities, often through dividends taxed at a top rate of 39.5%. This effectively results in double taxation.
The FBUK report also notes that around 5,000 businesses are expected to be directly affected between 2026 and 2030, a figure significantly higher than the Government’s estimate of 550 per year. And because the £1 million cap is not index-linked, many more businesses will fall within scope over time.
Not just about farms
While APR has dominated much of the news headlines and political conversation, the businesses affected by the BPR changes are spread across every region and sector. Whether it’s a manufacturing firm, a regional wholesaler, or a multi-generational retail business, the impact could be just as severe.
As Stuart Paver, Chair of Pavers Shoes, put it in the FBUK report: “I must spend time and money looking at how I can avoid leaving a huge burden to the next generation.”
That sentiment will resonate with many of the family businesses we support.
How Gorvins can help
If you’re a family business owner, now is the time to take stock. While the changes won’t come into force until April 2026, reviewing your succession plans, business structure and potential IHT exposure is essential.
At Gorvins, we have the specialist knowledge to help you navigate these changes. With practical legal advice rooted in an understanding of how family businesses operate, you’ll get peace of mind that you’re positioned for a secure future.
If you have concerns about Business Property Relief or succession planning in your business, our expert team is here to help. Call us on 0161 930 5151, email enquiries@gorvins.com, or fill out our online form to arrange a consultation.