Latest News
Inheritance Tax Changes: What Farmers and Business Owners Need to Know
The last two Autumn Budgets have introduced major reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR)—two key inheritance tax reliefs that have long helped family farms and businesses pass assets to the next generation without triggering large tax bills. These changes will significantly impact succession planning and estate management from April 2026 onwards.________________________________________
What Changed in the 2024 Budget
• Introduction of a £1 million cap
From 6 April 2026, the first £1 million of combined agricultural and business property per individual will continue to qualify for 100% relief.
Any value above £1 million will only receive 50% relief, meaning an effective tax rate of 20% on excess assets (instead of zero under current rules).
• Impact on high-value estates
Previously, farms and businesses could pass on unlimited qualifying assets tax-free. Under the new rules, a farming couple could still pass on up to £3 million tax-free (using nil-rate bands and allowances), but larger estates will face significant IHT bills.
• Shares on AIM and similar markets
BPR on shares traded on recognised but unlisted markets (such as AIM) will drop from 100% to 50%, regardless of value.
________________________________________
What Changed in the 2025 Budget
• Transferable Allowance Between Spouses
The £1 million allowance for 100% APR/BPR relief is now transferable between spouses or civil partners, even if the first death occurred before April 2026. This means couples can shelter up to £2 million of qualifying assets at 100% relief.
• Freeze Extended on Nil-Rate Bands
The standard nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen until April 2031, increasing fiscal drag as asset values rise.
• Pensions Included in IHT
From April 2027, unspent pension pots will be included in the estate for IHT purposes.
________________________________________
Why This Matters
• Farmers: Rising land values mean many family farms will exceed the £1 million cap, forcing sales or restructuring to meet tax bills.
• Business Owners: Multi-generational businesses could face IHT liabilities in the millions, reducing funds for growth and succession.
• Timing: Transitional rules apply to gifts made since October 2024, so planning must start now.
________________________________________
What You Should Do Now
1. Review Your Estate Plan
Check current asset values and calculate potential IHT exposure under the new rules.
2. Update Wills and Succession Plans
Ensure allowances are maximised and transferable relief is used effectively.
3. Consider Lifetime Gifting
The seven-year rule still applies, so early action can reduce future liabilities.
4. Seek Professional Advice
Complex rules around APR/BPR, trusts, and pensions require tailored planning.
________________________________________
Book an Inheritance Tax Planning Review with Our Team
We’ll help you protect your farm or business, minimise tax, and secure your family’s future.