# Business property relief and the £2.5 million allowance: what an estate with unquoted shares pays above the line, worked

> From 6 April 2026, 100% business and agricultural relief stops at £2.5 million, with 50% above it. A £4 million shareholding worked, plus the spouse transfer.

- Page to cite: https://aeolookup.com/solicitors/business-property-relief-2-5-million-allowance-50-percent-above-worked-estates/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Solicitors, Probate and private client
- Published 8 October 2026
- Key fact: An unmarried owner who dies in 2026 holding £4,000,000 of qualifying unquoted shares and nothing else gets 100% relief on £2,500,000 and 50% on £1,500,000, so £3,250,000 is relieved and £750,000 is chargeable; after the £325,000 nil-rate band that is £425,000 taxed at 40%, which is £170,000. Under a £1,000,000 cap the same estate would pay £470,000, so the £2.5 million allowance saves £300,000 (40% of the £750,000 of extra relief on the £1,500,000 that moves from 50% to 100%).
- Sources: GOV.UK, Agricultural Property Relief and Business Property Relief changes (updated 3 March 2026: £2.5 million allowance for 100% relief, 50% above it, unused allowance transferable to a surviving spouse or civil partner from 6 April 2026, full allowance assumed available if the first death was before that date, transitional rules for gifts from 30 October 2024, shares designated "not listed" at 50%); GOV.UK, Inheritance Tax (40% rate, £325,000 nil-rate band, unused threshold transferable to a partner). Read 8 October 2026. The Finance Act provisions themselves were not read for this guide.

An executor brings in a will and says the main asset is the deceased's family company. For years the question was whether business property relief took it out of inheritance tax altogether. For deaths on or after 6 April 2026 the question is how much of the value sits below a line, because there is now a line.

## What changed

GOV.UK's page on the changes, updated on 3 March 2026, says the following for deaths on or after 6 April 2026:

- Qualifying business and agricultural property keeps 100% relief up to a combined £2.5 million.
- Qualifying value above that gets 50% relief.
- Any unused allowance can be passed to a surviving spouse or civil partner from 6 April 2026. If the first death was before that date, the full £2.5 million is assumed to be available to transfer.
- Transitional rules cover lifetime gifts made on or after 30 October 2024 where the donor dies on or after 6 April 2026 and within seven years of the gift.
- Shares designated "not listed" on recognised exchanges, and qualifying shares on foreign exchanges that are not recognised, get 50% in all circumstances.

The allowance is shared between agricultural and business property. It is one figure, not £2.5 million of each. An earlier GOV.UK policy paper (published 30 October 2024) used a £1 million figure and said the allowance would not transfer. That paper is out of date on both points, so check the date on any version a client brings you.

## The sum for a £4 million shareholding

Take an unmarried owner who dies in 2026 holding £4,000,000 of qualifying unquoted trading company shares and nothing else, so no residence nil-rate band question arises.

1. 100% relief on the first £2,500,000: relief £2,500,000.
2. 50% relief on the remaining £1,500,000: relief £750,000.
3. Total relief £3,250,000, so the chargeable value is £4,000,000 − £3,250,000 = £750,000.
4. Nil-rate band £325,000, giving £750,000 − £325,000 = £425,000 taxable.
5. Tax at 40%: £170,000.

Under the £1 million cap first announced, the same estate would have been: relief £1,000,000 + £1,500,000 (50% of £3,000,000) = £2,500,000; chargeable £1,500,000; less £325,000 is £1,175,000; at 40% that is £470,000. The saving from the £2.5 million allowance is £300,000. As a check, 50% of the £1,500,000 that now gets full relief is £750,000, and 40% of that is £300,000.

| Allowance | Relief | Chargeable | After £325,000 nil-rate band | Tax at 40% |
|---|---|---|---|---|
| £1,000,000 (first proposal) | £2,500,000 | £1,500,000 | £1,175,000 | £470,000 |
| £2,500,000 (6 April 2026) | £3,250,000 | £750,000 | £425,000 | £170,000 |

## The surviving spouse case

A widow dies holding £6,000,000 of qualifying unquoted shares. Her husband died before 6 April 2026 and left everything to her. GOV.UK says the full £2.5 million is assumed to be available to transfer, so her allowance is £5,000,000.

1. 100% relief on £5,000,000.
2. 50% relief on £1,000,000, which is £500,000.
3. Chargeable value: £6,000,000 − £5,500,000 = £500,000.
4. Unused nil-rate band transfers too, so her threshold is £650,000. The £500,000 falls below it and the tax is nil.

Check that the first death left no part of the allowance used. If the husband left qualifying business property to someone other than his wife, that part of the allowance went with it, and only the unused remainder transfers.

## Which assets use the allowance

The allowance is used by property that would otherwise get 100% relief. Shares designated "not listed", at 50% in any case, do not use it. Where a client has a mix, work out the 100% property first, apply the allowance, then treat the rest at 50%.

## What to add to the probate file

1. The type of each business or agricultural asset and the relief it attracts.
2. Whether the owner made gifts of qualifying property on or after 30 October 2024, and the dates.
3. Whether a spouse or civil partner died earlier, and what they left to whom.
4. The ownership conditions for the relief. This guide does not cover them, and the 100% and 50% rates only apply to property that qualifies in the first place.
5. Whether the estate is large enough for the residence nil-rate band to taper, which our [£2 million taper guide](https://aeolookup.com/solicitors/residence-nil-rate-band-taper-2-million-estate-worked-examples/) sets out.

Check when the inheritance tax falls due and build the figure into your [probate timeline](https://aeolookup.com/solicitors/probate-timeline-calculator-key-dates/) early. When the estate comes to distribute, the [estate accounts template](https://aeolookup.com/solicitors/estate-accounts-template-capital-income-distribution-worked-example/) shows where the relief and the tax sit.

## A caution on the law

This guide uses GOV.UK's description of the rules, updated on 3 March 2026. We did not read the Finance Act provisions, so a firm advising on a large estate should read the enacted text before it settles a figure.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join a private client team and set out the relief schedule, the allowance and the spouse transfer for each estate from the asset list, ready for the supervising solicitor to check and sign off. The advice stays with the solicitor.

This is general information for England and Wales, not legal advice on any estate.

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General information for UK small firms, not legal, tax or financial advice.