How Rachel Reeves's inheritance tax changes could impact your family business

The rules on business property relief are a new headache for small firms

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Most of the attention – and anger – since Rachel Reeves’ Budget announcement on inheritance tax (IHT) has focused on the impacts on farmers. But family business owners are facing identical changes to the IHT rules under the chancellor’s plans. It’s vital they start to plan accordingly.

The key change, due to come into effect from 6 April 2026, is to business property relief (BPR). Like agricultural property relief, its cousin in the farming sector, BPR currently takes the majority of businesses out of the IHT net; when you leave a business (or an interest in a business) to your heirs, or transfer it to them during your lifetime, there is no IHT to pay.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.