The UK Government has revised its proposed reforms to inheritance tax (IHT) relief for businesses and agricultural property, following significant concern from the farming and private business sectors. The changes affect Business Property Relief (BPR) and Agricultural Property Relief (APR) and will apply from 6 April 2026.
What Has Changed
Under the revised proposals, the threshold for 100% IHT relief will increase from £1 million to £2.5 million per individual. Where assets pass between spouses or civil partners, this may allow up to £5 million of qualifying business or agricultural assets to benefit from full relief, subject to the usual conditions.
Assets above this threshold will continue to qualify for 50% relief.
This represents a significant softening of the original proposals and is intended to protect the majority of family farms and privately owned businesses, while restricting relief for larger estates.
Practical Points for Clients
Clients with business or agricultural assets should consider the following:
- Review the current value of business and agricultural assets, including land and partnership interests
- Assess whether assets are likely to exceed the new £2.5 million threshold
- Consider the liquidity position of the estate and ability to meet any future tax liabilities
- Review ownership structures, including partnerships, shareholdings and trusts
- Revisit succession plans, including wills and lifetime gifting strategies
- Take advice on the interaction between BPR, APR, nil-rate bands and spousal exemptions
Early planning remains essential, particularly for asset-rich but cash-poor estates.
Conclusion and Next Steps
While the Government’s revised position provides greater certainty, the reforms still represent a material change to inheritance tax planning. Businesses and farming families should not assume full relief will automatically apply.
If you own business or agricultural assets, now is the time to review your estate planning arrangements. Our private client team advises on succession planning, structuring and inheritance tax mitigation. Please contact us to discuss how these changes may affect you and your family.