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Business Property Relief (BPR) can reduce the taxable value of qualifying business assets for inheritance tax (IHT) purposes by up to 100 percent. Currently, where full relief means that no IHT is due, taxpayers (e.g. individuals settling assets on trusts or executors on an individual’s death) might not consider it necessary to undertake a tax valuation of the relevant asset at that time. However, changes announced at the last Budget mean that, from 6 April 2026, IHT charges could arise on assets that currently attract full BPR. Affected taxpayers should therefore be satisfied that, if required to do so by HMRC, they could justify the valuation placed on those assets for IHT purposes.

This article summarises tax valuation issues that individuals and trustees with IHT liabilities which might not be fully relieved by BPR from 2026/27 onwards should consider. These issues will also be relevant to professional advisers and service providers who deal with trust, probate and executry issues.Ìý

Where the qualifying conditions are met, BPR currently reduces the amount of a business asset’s market value that is subject to IHT by either 50 or 100 percent.

Assets that can currently qualify for 100 percent BPR include unquoted shares in trading companies (e.g. shares in unlisted companies and shares that are traded only on the Alternative Investment Market (AIM) of the London Stock Exchange or a similar market). However, from 6 April 2026 the rate at which BPR is available on qualifying business assets will be:

• Reduced to 50 percent for shares traded on AIM or a similar market; and
• Broadly, limited to 100 percent on the first £1 million of all qualifying business assets (note this allowance is also utilised by assets that qualify for 100 percent Agricultural Property Relief) and reduced to 50 percent above that limit.

This article focuses on IHT charges that could potentially arise in relation to shares in 2026/27 and later years which, at present, would be wholly relieved by BPR.

These changes mean that tax valuations of shares will be required in 2026/27 and subsequent years which were not needed before, for example when:

• Individuals make chargeable lifetime transfers (e.g. by settling shares in a family trust);
• Trustees are subject to 10-yearly charges on shares in a settlement, and/or exit charges when distributing shares to beneficiaries; and
• Executors are subject to IHT in respect of shares (including in relation to ‘failedâ€� potentially exempt transfers and chargeable lifetime transfers made fewer than seven years before the date of death).Ìý

HMRC can be expected to scrutinise how qualifying shares have been valued for IHT purposes from 6 April 2026 as tax will then be at stake � both in relation to whether the £1 million limit on 100 percent BPR has been exceeded and for the purposes of calculating any IHT due where it has.

Issues to consider for tax valuation purposes include the company’s trading performance, identifying an appropriate financial metric (e.g. multiples on recent transactions involving comparable businesses), determining appropriate discounts for minority holdings (which can be more complex for IHT valuations), and ensuring that the valuation methodology correctly applies the specific tax valuation case law rules. Considering evolving market practice on company valuations, HMRC’s Shares and Assets Valuations team’s approach to these, and any changes in prescribed valuation principles in relation to shares held in trust � see below � is also critical.

This can apply equally to AIM listed shares as, if they are thinly traded, HMRC might not consider that their published price necessarily reflects their tax market value.

However, as they could become a reference point for IHT valuations in 2026/27 and subsequent years, it’s important to consider the valuations placed on shares for other tax purposes before 6 April 2026 (e.g. income tax valuations placed on shares in family companies that are ‘employment-related securities� for payroll purposes).

The value placed on shares for IHT purposes will also affect their base cost for capital gains tax (CGT) purposes (whereas, at present, the tax market value placed on shares when, for example, they are distributed to beneficiaries from a deceased’s estate might not be considered in detail until they are subsequently sold).

In concert with the prospective BPR changes, the way IHT valuations are determined for shares held in some trusts is also likely to change.

Currently, shareholdings in the same company held by different trusts established by the same settlor are usually valued separately for IHT purposes, with any applicable minority discounts based on each trust’s individual holding. However, a recent HMRC consultation, which closed on 23 April (see our separate articleÌýin today’s edition), proposes a new ‘relatedâ€� property rule. If adopted, this would mean that valuations of company shareholdings held by multiple trusts which were established by the same settlor would be valued together for IHT purposes if doing so would result in a higher valuation.

Individuals considering wealth and succession planning, trustees and executors â€� and their advisers â€� must therefore ensure they can support the basis on which the tax market value of shares that qualify for BPR has been determined with a level of rigour that, if necessary, could satisfy HMRC on enquiry. They should also consider the potential interaction of valuations determined for IHT purposes with valuations required for other taxes (e.g. PAYE, NIC, CGT and corporation tax).Ìý

But it is not only shareholders who are affected by the upcoming BPR changes � companies will also need to understand the potential size of any IHT charges to plan how to deliver cash to shareholders, where appropriate, for settling those liabilities in future.

ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in the UK’s multidisciplinary team of tax, legal and valuation professionals can advise shareholders, trustees and executors on succession planning and IHT compliance. Please contact the authors or your usual ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in the UK contact, to talk through what the prospective BPR changes might mean for you.

For further information please contact:

• Jonathan Riley
• James PorterÌý