Common Questions on BPR & Trusts Before 6 April
Q&A: Common Questions on BPR & Trusts Before 6 April
Introduction
Business Property Relief (BPR) is a tax relief in the UK.
This tax relief allows individuals to pass on certain business assets to their heirs or beneficiaries without incurring inheritance tax.
As the 6 April deadline approaches next year, uncertainty around BPR and trust planning is at an all-time high. This Q&A breaks down the most common concerns, providing clarity on what can still be done before the changes take effect and where specialist advice may be essential.
Q
Do I have to use all my BPR at once?
A
No. You can transfer only part of a business or business property. BPR is not an “allowance” — it applies to whatever you transfer, whether all or part.
Q
If I transfer business assets into a trust before 6 April, will BPR apply immediately?
A
Usually yes — provided:
- you’ve owned the assets for two years, and
- they qualify as relevant business property.
This can reduce the taxable value of the transfer to zero, avoiding the 20% lifetime IHT charge.
Q
Will transferring to a trust restart the two-year ownership clock?
A
No, not normally.
The trust can inherit your original ownership period if the business interest remains essentially the same.
However, if you transfer different assets or restructure significantly, the clock may restart.
Q
Will a transfer into a trust trigger immediate inheritance tax?
A
It can, but not if BPR reduces the value to zero.
If the business doesn’t qualify or only qualifies for 50% BPR, there may still be a charge.
Q
Do I need to complete the transfer before 6 April?
A
Not for BPR itself, but yes if:
- you want the transfer to count as part of this tax year,
- you are planning multiple trust entries over tax years,
- you want the transfer done before potential rule changes or budget updates.
Q
Does BPR apply differently for a gift to children versus a trust?
A
No.
The type of transfer doesn’t affect whether BPR applies.
But the IHT treatment (PET vs. CLT) does differ.
Q
Will I lose BPR if the business is sold soon after I put it into trust?
A
Yes.
If the trustees sell the business, the trust may lose BPR and become exposed to IHT charges later.
Q
Can I put business property into more than one trust and still get BPR?
A
Yes, as long as each transfer qualifies at the time.
However, creating multiple trusts may impact:
- trust reporting
- 10-year charges
- effective nil-rate band allocation
Q
Does the business need to be valued before 6 April?
A
Yes, if:
- you’re transferring before year end, or
- you need evidence for HMRC.
A realistic valuation helps avoid disputes.
Q
Does CGT apply when transferring to a trust?
A
It can, but Hold-Over Relief is usually available for BPR-qualifying business assets.
This avoids immediate CGT.
Q
Do I still need to worry about the seven-year rule?
A
Yes.
A transfer into a trust is a CLT, not a PET.
The CLT limit is £325,000 per individual and refreshes every seven years.
Q
What happens if I don’t act before 6 April?
A
Nothing dramatic, BPR remains available, but tax-year planning opportunities might be lost. Currently 100% of all the value of relevant business property qualifies for relief. From 6 April 2026 this is capped at £1m per individual, with any excess only attracting 50% relief.
Take a look at our handy check list : BPR & Trust Planning Before 6 April
-
Confirm Eligibility for BPR
- Ensure the asset qualifies as “relevant business property.”
- Check the business is predominantly trading, not investment-based.
- Confirm the asset has been owned for at least two years.
-
Decide the Type of Transfer
- Gift to an individual (PET)
- Transfer into a trust (CLT)
- Sale or restructuring of business interests
- Decide whether the transfer needs to be completed before 6 April for tax-year planning.
-
Assess Inheritance Tax Implications
- Will the transfer create an immediate lifetime IHT charge?
- Confirm whether BPR reduces the transfer value to £0, avoiding the 20% CLT charge.
- Consider the impact on the nil-rate band.
-
Consider Capital Gains Tax (CGT)
- Determine whether Hold-Over Relief is available.
- If the transfer is before year-end, check if CGT planning is needed for this tax year.
-
Check Whether Timing Affects Relief
- Confirm that BPR will still apply at the date of the transfer, not just at death.
- Ensure any trust transfers are completed before 6 April if that timing is strategically beneficial.
-
Understand the Effect of Using BPR
- Decide how much BPR-qualifying property to transfer (you do not need to use it all at once).
- Check whether multiple trusts are intended and whether this affects the 10-year trust charge later.
-
Confirm Business Structure Issues
- Has the business changed recently (e.g., trading levels, assets sold)?
- Will the business be sold soon → does that create a risk of losing BPR?
- Ensure corporate documents allow the transfer (company articles, shareholder agreements).
-
Get a Reliable Valuation
- Ensure the valuation is up-to-date and supportable if HMRC reviews it.
- Valuation may affect IHT on CLTs and future trust charges.
-
Complete Legal & Administrative Steps
- Obtain required signatures
- Update share registers
- Prepare trust documents
- Notify Companies House if needed
- Complete professional trustee steps
-
Prepare Documentation for HMRC
- Evidence of trading activity
- Business accounts
- Explanation of BPR eligibility
- Trust deed and gift records
-
Consider Post-Transfer Implications
- Effect on control of the business
- Trustee requirements
- Ongoing reporting obligations
- Future 10-year IHT charges for trusts
-
Follow-Up After 6 April
- File any required IHT100 or IHT100a forms
- Claim BPR formally
- Update any CGT elections (e.g., hold-over claims)
