Business Property Relief (BPR) is an established form of estate planning that can be used to pass on more of a person’s wealth, free from inheritance tax.

It is an inheritance tax relief that incentivises investments in unquoted trading companies or those listed on the Alternative Investment Market (AIM). In order to be eligible for BPR, the companies must be actively trading, meaning the firm can’t just hold cash, investments, or property. Business Property Relief offers a range of benefits which compare favourably to other existing more conventional IHT strategies. These include:

1. You don’t lose access to your capital meaning it remains in your name and control until the time of your death.

2. Making gifts into investments that qualify for Business PropertyRelief are 100% exempt from inheritance tax after just two years. Rather than taking 7 years (which is the normal requirement for gifts made to your children)

3. BPR investments do not use the nil-rate band. This means you can plan for your nil-rate band allowance to reduce the inheritance tax charge on less liquid assets, such as your home, which are otherwise difficult to place outside of the estate for tax purposes.

However, there are some risks such as:

1. Investments in unquoted companies or those quoted on AIM could be more volatile. They are also less liquid and like any investment, there could be a fall in value, and you may get back less than you
   invest.

2. There cannot be any guarantee that companies that qualify today
   will remain BPR qualifying in the future.

Business Property Relief invests in assets which are difficult to sell such as shares in unlisted companies. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits.