When is BPR available?

To understand who will be affected by the new rules, it is relevant to consider what property is eligible for 100% BPR.

‘Relevant business property’ and rates of relief provided certain criteria is met (as further discussed below):

Type	Rate of relief
A business or an interest in a business	100%
Unquoted securities which on their own or combined with other unquoted shares or securities give control of an unquoted company	100%
Unquoted shares, including shares listed on the Alternative Investment Market (AIM)	100% (50% from 6 April 2026)
Quoted shares which give control of the company	50%
Land or buildings, machinery or plant used wholly or mainly for the purposes of the business carried on by a company or partnership	50%
Land or buildings, machinery, or plant available under a life interest and used in a business caried on by the beneficiary	50%

Minimum ownership period criteria

Property is not relevant business property unless it was owned throughout the transfer period of two years immediately preceding the death (with scope for ownership to be treated as unbroken in certain circumstances, such as where relevant property is sold and replaced or inherited by a surviving spouse or civil partner).

Businesses that do not qualify for relief

BPR is not available in relation to an interest in a business which is:

not carried on for gain (not for profit or not on a commercial basis); or
subject to a contract for sale or in the process of being wound up; or
"wholly or mainly" dealing in securities, stocks or shares, land, or buildings or in the making or holding of investments.

However, shares or securities in a company can be relevant business property if the business of the company is that of holding shares or securities in another company which qualifies.

Applying the “wholly or mainly” test

Businesses which only generate investment income will not attract BPR. For example:

A residential or commercial property letting business;
A property dealing business;
A serviced office business.

Where a business is engaged in a mix of investment and non-investment activities, it is relevant to consider the relative prominence of each type of activity.

For some types of business, whether they will qualify for relief will very much depend on particular facts and circumstances and the nature and extent of the services provided. Such businesses have tended to be the subject of much of the case law in this area. Businesses which tend to fall into this category include:

Holiday lets;
Property management;
Property development - if there is also substantial letting and dealing;
Mixed estates of farming and holiday lets;
Caravan parks - where there is letting, holidays and caravan sales.

Trading businesses may sometimes be carrying a certain amount of investment activity. The all or nothing nature of the application of BPR, in conjunction with the wholly or mainly test, means that a business which is made up of 51% investment activity and only 49% trading will not qualify for BPR at all. Whereas if the trading activity increases to 51% and investment activity falls to 49%, 100% BPR should be available in respect of the whole.

Excepted assets

Even if BPR applies on application of the wholly or mainly test, excessive cash reserves may be viewed as an excepted asset with that value excluded from the scope of the relief, if it cannot be demonstrated that the reserve has been made for some specific business project or purpose in the future.

The same principle applies to other assets which on the face of it are not held for business purposes, such as residential property owned by the business.

In certain circumstances, HMRC will confirm the extent of availability of BPR ahead of a chargeable event via its non-statutory clearance service for business owners.