Following the changes to Business Property Relief and Agricultural Property Relief announced in 2024 and the subsequent amendments made at the end of 2025, many clients have been considering whether it would now be a good idea to hold qualifying assets jointly. While this may be a highly personal decision, there are a few reasons as to why jointly owning qualifying property may be a good idea from a tax perspective. There will of course be other factors to consider beyond tax – for example, asset protection, any restrictions in shareholders agreements and similar or restrictive covenants governing inheritance of farmland.

As most people will now be aware, November’s Budget included an announcement that the 100% BPR/APR allowance for qualifying assets would be transferable between spouses on death. This was followed in December by a further announcement to extend the allowance from £1m to £2.5m (seen by some as an early Christmas present) and extending the potential value of assets qualifying for 100% relief to £5m per couple.

Advantages of sharing ownership

Sharing ownership of BPR qualifying assets will most clearly be advantageous in cases where the property is worth, or may likely grow to be worth, more than £5m (the new allowance is currently not set to increase with inflation until 2031).

Planning with trusts

Dividing ownership of qualifying assets between spouses/civil partners would allow the option for both partners to settle £2.5m of qualifying property into trust, without incurring an inheritance tax (IHT) charge (potentially more where the nil rate band is still available). This may be attractive during lifetime if couples want to pass ownership of the assets down the generations while maintaining some level of control and asset protection.

Lifetime gifts would also allow this £2.5m allowance to refresh, provided the donor survives the gift by seven years – thus potentially allowing the couple to essentially benefit from up to £10m (or maybe more) of 100% allowance. Be careful here though – should they use that “refreshed” allowance to settle a further trust, that additional trust will not be entitled to any 100% allowance – the £2.5m is a lifetime allowance in respect of trusts with the same settlor (there are some transitional rules for trusts set up before October 2024).

However, in spite of this limitation on trust allowance, there may still be scope for each spouse to include a life interest trust for the other in their Will. This would mean that any value would be included in the surviving spouse’s estate (thus benefitting from the two 100% allowances). Such an option may be attractive where one (or both) members of the couple want to be certain that assets will pass on as desired following a spouse’s death, while also providing income for their lifetime (for example, in second marriages where each spouse wants to provide for children of their first marriage).

Those considering gifting assets during their lifetime will always have to consider the capital gains tax (‘CGT’) position. Under the current rules, there is an uplift to market value for assets owned at death, thus reducing exposure to CGT for successors. Although there has been some speculation that this may change in future, so far the Government has chosen not to make any changes to this treatment. For gifts into trust and for qualifying assets it may be possible to claim holdover relief so that no gain arises at the time of the gift, but this will effectively reduce the base cost for the done, thereby increasing any gain should they eventually sell the asset.

Valuation questions

Passing assets on early, including into trust, may result in a lower overall valuation. For example, if each spouse has made gifts during their lifetime, this may mean each individual shareholding (or interest in land) will qualify for a discount. There are some situations when the law allows property owned by different people to be valued together (known as “marriage value”) but, where shares are genuinely passed down or placed into trust, this may increase the level of discount available in some cases and so reduce the overall value of the estate. The benefit of this may increase following the first death.

Flexibility

Spreading ownership of qualifying assets between a couple allows maximum flexibility, with the potential to give away some of the assets on the first death, for example, regardless of which spouse pre-deceases the other. This flexibility may also be valuable should the rules governing these reliefs (or other elements of the IHT rules) change again in future.

Residence nil rate band

The Residence Nil Rate Band (‘RNRB’) is worth up to £175,000 per individual (£350,000 per couple where the couple are married or in a civil partnership). Broadly, the RNRB reduces the value of the main residence in the estate on death, where that home is left to direct descendants (there are a number of complex qualifying rules here). However, the RNRB tapers away where an estate is valued above £2m (before other reliefs). Where joint estates can be reduced to £4 m and the estate of the surviving spouse can be reduced to £2m, perhaps through lifetime giving, joint ownership may make the difference to whether this relief is available or not.

Going it alone

Joint or shared ownership of qualifying assets won’t suit everyone. There may be many reasons – asset protection, shareholders or agricultural tenancy agreements or simply the sentimental need to keep control of a business you have spent a lifetime building. Even so, the BPR/APR position can be improved with careful planning – for example, utilising trusts that allow you to give away value while retaining voting control until you are ready to pass things on to the next generation. Will planning will also be important – this could mean passing assets down the generations, or it could mean utilising trusts which allow the qualifying assets to remain in your spouse’s estate, while ensuring the capital will pass on according to your wishes.

Why professional advice is essential for changes to BPR/APR relief

Whether you decide on joint or shared ownership or to keep your qualifying assets in your sole ownership, it is important to think about your succession plans as early as possible, and to seek advice. Even with the changes to BPR/APR relief, IHT still needs to be considered in the round, alongside, for example, CGT implications, succession plans, a need for future income and asset protection. In some cases, there can be an advantage to holding assets until death – at present there will an uplift in base cost for CGT for assets held at death, which can still be a valuable relief.

IHT should never be considered in isolation and an adviser can also help you consider the possible impact on other taxes – not just capital gains tax, but also stamp duty land tax, for example. The position may also be different where one spouse is long-term resident in the UK and the other is not. In addition to tax, there may be regulatory, investment and asset protections considerations which would impact the gifting of assets.

Passing on a business (or farm) can feel like an emotional decision as much as a financial decision, and where succession is the plan it is important to have conversations as soon as possible, not just with advisers, but with family – so everyone knows what to expect and everyone is on board with “the plan”. The earlier planning takes place, the more options are available from a tax perspective, but perhaps even more importantly, the more family conflict can be avoided by ensuring everyone’s expectations are managed.

If you would like further information on the transferable BPR/APR allowance, please get in touch with your usual RSM contact.

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