Why am I being charged Class 2 National Insurance in my 2024/25 Self-Assessment?

Some self-employed taxpayers are mistakenly charged Class 2 NICs due to an HMRC IT issue. If your profits exceed £12,570, you should only pay Class 4 National Insurance, not Class 2. Always check your self-assessment 2024/25 calculation to ensure it is correct.

Do I need to pay Class 2 NICs through Self-Assessment for 2024/25?

No. From 6 April 2024, Class 2 NICs are voluntary for self-employed individuals with profits below £6,725. Voluntary contributions can help build qualifying years for your State Pension, but if your profits are above this threshold, Class 2 should not appear on your self-assessment.

What should I do if my Self-Assessment shows the wrong Class 2 NIC charge?

If you’ve filed your 2024/25 self-assessment and notice an incorrect Class 2 NIC charge, contact HMRC to request a correction. If you haven’t filed yet, consider waiting until HMRC resolves the issue (expected by September 2025).

What happens if I already paid the incorrect Class 2 NICs through Self-Assessment?

HMRC will refund or credit any incorrect Class 2 NIC payments to your self-assessment account once the error is fixed. Keep proof of payment and HMRC correspondence for reference.

When is the deadline for submitting my 2024/25 Self-Assessment?

The online filing and payment deadline for 2024/25 self-assessment is 31 January 2026. The HMRC Class 2 NIC error does not affect this deadline. Submit on time to avoid late filing penalties.

Common Pitfalls of Business Property Relief Explained

Business property relief – what it means and why it matters

When it comes to passing on a business, the relief known as business property relief (BPR) can make a substantial difference to your inheritance tax (IHT) position and lifetime gifting strategy.

Whether you’re thinking of retirement, succession, handing over to a family member or preparing for a sale, ensuring that business property relief applies correctly is vital — and mistakes can be costly.

In this article we look at how business property relief works in 2025/26, the key qualifying conditions, common pitfalls, recent rule changes affecting business property relief, and what you can do now to maximise the benefit of business property relief.

What is business property relief and how does it apply?

Business property relief is a relief from IHT (or in some cases lifetime gift tax implications) which may apply when you hold certain business assets such as a sole trader business, a partnership interest or shares in an unquoted trading company.

The relief can reduce the taxable value of those assets by 100% (or sometimes 50 %) if the qualifying conditions are met, thereby reducing the IHT due.

In practical terms, business property relief can mean that a business or shares in a trading company can pass to the next generation with little or no IHT — provided the rules are satisfied.

However: if the asset or business fails to satisfy the conditions for business property relief, relief may be denied, reduced or even clawed back.

That’s why understanding the detail is so important.

“Infographic titled ‘The Pitfalls of Business Property Relief (BPR)’ explaining when 100% and 50% BPR apply, followed by four common problems: too much cash, binding agreements, land and buildings, and retirement. Includes warning icons and the Trueman Brown website at the bottom.”

Qualifying criteria for business property relief

To qualify for the relief, the following key conditions generally apply:

The asset must be a qualifying business interest: e.g., a sole-trader business, an interest as a partner in a trading partnership, or shares in an unquoted trading company (not simply a holding company).
The business must be a trading business and not “wholly or mainly” an investment business. If more than 50 % of its activities (or value) are non-trading (for example property letting, share investments) then the relief may fail.
The asset must have been owned for the required period — typically at least two years before the gift or death (although other minimums may apply).
At the date of the gift or death (or other relevant event) there must not be a binding contract for sale, or intention to dispose, which means the business must still be running.
After the gift or death the business must continue trading in a way that does not breach the relief conditions (otherwise business property relief could be clawed back).

If all these conditions are satisfied, then business property relief may apply — but the devil is in the detail. Many business owners presume relief will automatically apply, only to discover later that key conditions were missed.

Common pitfalls in applying business property relief

When looking to claim business property relief, there are a number of common traps:

Mixed business/investment operations: If a company or partnership carries on both trading and non-trading/investment activities (such as holding property or shares), then the “trading” test may fail and business property relief may not apply.
Ownership period & timing: If you haven’t held the asset long enough (for example less than two years), or you set up a binding disposal contract before the relevant event (death or gift), then business property relief may be refused.
Change of business use: If after the gift or death the business ceases trading, converts to an investment business or is wound down, then business property relief may be clawed back.
Trusts and lifetime transfers: Business property relief rules for trusts and lifetime gifts are more complex — timing, exit charges and transitional arrangements must be carefully managed.
Failure to act ahead of rule changes: As the rules for business property relief change (see next section) business owners who assume the old regime still applies may find themselves caught by the new regime.

These pitfalls underline why active review and planning is essential when relying on business property relief.

Recent and upcoming rule changes for business property relief in 2025/26

For the 2025/26 tax year and looking ahead to the next few years, there are several important changes to the business property relief rules you need to be aware of:

The much-discussed new cap: From 6 April 2026, a £1 million allowance will apply for 100% relief on qualifying business (and certain agricultural) property. Amounts above that will only get 50% relief, meaning effectively a 20% IHT charge on the excess. Many business owners will still be operating under the old regime in 2025/26, but transitions apply.
Shares in companies not listed on a recognised stock exchange (for example those listed only on the Alternative Investment Market (AIM)) will, from April 2026, only qualify for 50% relief (rather than 100% in many cases under the old rules).
Trust changes: For businesses held in trust, the calculation of exit charges will be standardised and values before relief will be used in many cases — increasing the potential tax exposure. Transitional rules apply for gifts made after 30 October 2024 (if death is after 6 April 2026) and for trusts reaching 10-year anniversaries from April 2026.
In 2025/26, although the full cap is not yet in force for all taxpayers, many advisers are recommending business owners review their structures early to crystallise qualifying business property relief under the current regime, before the changes take effect.

In short: in 2025/26 you are operating under the old rules, but planning needs to assume the new regime is coming swiftly, and the window is narrowing. Business property relief may be available now, but you should act before the rule changes bite.

Strategies to maximise business property relief

Given the complexity and evolving nature of business property relief, here are practical steps you can consider:

Review your business activities and structure to ensure it remains a genuine trading business (and not mainly investment) so that business property relief conditions are met.
Confirm that the relevant asset has been owned for at least the required period and there is no contract in place that could disqualify business property relief.
Consider whether it might be prudent to crystallise the relief now (in 2025/26) under the older regime rather than waiting and risking the changes.
For businesses held in trust, review the trust documentation, anniversaries, exit charge provisions and consider the impact of the upcoming business property relief changes when planning timing.
Revisit your wills, succession and gifting plans to ensure business property relief is factored in — for example how assets will pass, whether gifts are made in lifetime, and how trusts are used.
Obtain professional valuations of the business interests to support the relief claim and liaise with tax advisors so business property relief is properly applied and documented.
Monitor business use after the gift or death: ensure the business continues to trade and does not slide into investment activities which might jeopardise business property relief.

By being proactive, you stand a much better chance of obtaining business property relief and avoiding unexpected tax pitfalls.

How Trueman Brown can help you

At Trueman Brown, we appreciate that business property relief is a vital component of many business succession and estate plans — but also that the rules are changing and the stakes are higher than ever.

We can support you by:

Reviewing your current business asset holdings, structure and activities to highlight any risk areas that affect the relief.
Modelling the impact of the upcoming changes to business property relief (for example the £1 million allowance cap, the 50% relief limit on certain shares, trust exit charge changes) and helping you develop strategies to mitigate the effect.
Assisting with valuations, preparing documentation for relief claims, reviewing wills/trusts and liaising with your tax advisors so relief is properly managed.
Advising on whether it makes sense to act sooner rather than later under the current rules, and helping you plan for timing of gifts, trust transfers or business restructuring to secure relief.

If you’d like to talk this through further and review how business property relief might apply in your circumstances in 2025/26 and beyond, please contact us:
📧 mark@truemanbrown.co.uk
📞 01708 397262

We’d be happy to arrange a discussion and show how we can help protect your business and estate planning ambition via business property relief.

Frequently asked questions (FAQ)

Q1. What types of assets qualify for business property relief?
A: Generally, qualifying assets include a sole trader business, a partnership interest in a trading business, or shares in an unquoted trading company. They must be genuine trading assets, not simply investment assets.

Q2. How long must I own the asset for business property relief to apply?
A: Typically you must have owned the asset for at least two years before the gift or death, and there must be no binding contract for disposal at the relevant date.

Q3. Will the new £1 million allowance cap for business property relief apply in 2025/26?
A: Not fully for all cases. The cap is due from 6 April 2026 for deaths or lifetime gifts after that date; however gifts made from 30 October 2024 may fall into the new regime if the donor dies on or after 6 April 2026. Early planning is advisable.

Q4. What happens if my company is listed on AIM or another alternative market — does business property relief still apply fully?
A: Under the upcoming changes from April 2026, shares in companies that are “not listed on a recognised stock exchange” (which includes AIM) will qualify only for 50% relief rather than 100%. In 2025/26 you may still benefit under the current rules, but you should plan for change.

Q5. Can business property relief be lost after death or gift?
A: Yes. If after the gift or death the business changes activity to become non-trading, or there is a binding disposal contract before the event, business property relief can be reduced or clawed back. The business must continue to meet the qualifying conditions.

Q6. Should I act now to secure business property relief?
A: Yes. Given the impending rule changes and the complexity of business property relief, it is wise to review your business, ownership, trusts and succession strategy as soon as possible so you can take advantage of current relief before the new regime applies.

Common Pitfalls of Business Property Relief Explained Clearly