On 6 April 2026, the Inheritance Tax (IHT) relief rules on Business Property Relief (BPR) and Agricultural Property Relief (APR) are getting a serious shake-up.
Currently, the rate of relief is 100%. That will be cut down to 50%, but a new £1 million allowance will be introduced and applied to the combined value of property qualifying for 100% BPR and 100% APR.
A consultation will be held in early 2025. Here’s what we currently know.
WHAT’S NEW? THE £1M ALLOWANCE
Under the new rules, you’ll get 100% relief on the first £1 million of qualifying property, but anything above that will drop to 50%. Here’s what’s covered:
- Property in the estate at death
- Gifts made within seven years of death that aren’t exempt
- Chargeable lifetime transfers, like property moved into trusts
But heads up: any unused allowance can’t be transferred over to your spouse or civil partner.
GIFTS FROM TODAY
If you make a gift of assets qualifying for BPR or APR on or after 30 October 2024, you’ll be caught by these new rules if you die after 5 April 2026 and within 7 years of the date of the gift.
CHANGES FOR TRUSTS
Right now, trusts with business or agricultural property enjoy 100% relief on those assets, so no tax at the 10-year anniversaries or if assets leave the trusts. From April 2026, though, that’s also capped at £1 million.
If you’ve set up multiple trusts before October 2024, each trust gets its own allowance. But for trusts set up after that, the government plans to divvy up the allowance across all trusts set up by the same settlor. Expect more on this in the 2025 consultation.
WHAT DOES THIS MEAN FOR YOU?
With these changes to BPR and APR on the horizon, it’s an opportune moment to take a fresh look at your succession planning, your will, and the potential impact the new rules could have on your IHT liability and successors.
If you have any questions, we’re here to help. These IHT changes are big but there is still time to plan. As ever, pre-planning and specialist advice can help you stay one step ahead.
