Inheritance Tax (IHT) net set to widen. Significant IHT changes from 2026 will cap Business Property Relief (BPR) and Agricultural Property Relief (APR) at £1 million. Many estates may face new tax liabilities as a result.
Upcoming Changes to BPR and APR
Changes announced last year are set to bring a radical overhaul of two key IHT reliefs, business property relief (BPR) and agricultural property relief (APR), from 6 April 2026.
The main change is a restriction on the amount of 100% relief available for qualifying agricultural and business property. Currently, there is no limit to the relief. Under the new rules, a £1 million allowance will apply. Any qualifying property above this limit will receive relief at 50%. As a result, more people will need to plan for potential IHT liabilities.
Key Points in Brief
- The £1 million allowance applies to the combined value of business and agricultural assets in an estate qualifying for 100% BPR or APR.
- The same allowance also applies to relievable agricultural and business property held in trusts.
- Property above £1 million will receive relief at 50%.
- From 6 April 2030, the allowance will increase in line with inflation.
What This Means for You
The £1 million limit is per person. Unused allowance cannot be transferred between spouses or civil partners. Anything not used will be lost.
Advance planning will become essential to ensure maximum use of the allowance. You will need to consider these changes alongside other IHT rules, such as lifetime gifting, and how IHT interacts with other taxes.
Some business owners may need to adjust their succession plans. This could include transferring assets to the next generation earlier or restructuring business ownership.
Planning for Future Liabilities
Decisions around IHT can require careful thought and sensitive handling. While last-minute adjustments to the rules are possible, the expectation is that these changes will take effect in 2026. Plans should reflect this.
From 6 April 2027, further changes are expected. These will bring unused pension funds and death benefits into the scope of IHT. Planning may be necessary, especially for those with significant pension savings. Professional advice can help you understand your options.
Next Steps
Bespoke advice is always recommended. Contact us to discuss how these changes may affect you and your estate planning.
