April 2026 will usher in changes to the Inheritance Tax relief available for assets which qualify for Business Property Relief and Agricultural Property Relief. These changes make it more important than ever to have plans in place to shield your estate from future tax liabilities. Whether it is before or after April, our experts can help.
The government announced changes to the 100% rate of Agricultural Property Relief and Business Property Relief from Inheritance Tax as part of its 2024 Budget. Legislation published in 2025 confirmed that this would take effect from 6 April 2026.
Here is a rundown of all the key points you need to know:
How are rules on Agricultural Property Relief and Business Property Relief changing?
Currently, anyone who holds qualifying business and agricultural assets can provide for those assets to be transferred to the beneficiaries of their will – without their beneficiaries being liable to pay any Inheritance Tax upon on any such qualifying assets they inherit.
While it was originally announced that the 100% relief would be restricted to the first £1 million from 6 April 2026, two key revisions to the proposals were announced in December 2025:
- The first £2.5 million of combined agricultural and business property will continue to receive 100% relief, with 50% relief on amounts over £2.5 million.
- The £2.5 million allowance will be transferable between spouses – meaning that any unused allowance can be carried over to the surviving spouse’s estate, providing for an allowance of up to £5 million on the death of the second spouse.
How will the Agricultural Property Relief and Business Property Relief changes affect you?
If you are planning to transfer qualifying assets worth less than £2.5 million: Nothing changes – providing the qualifying assets which you are passing on do not exceed the £2.5 million threshold, your beneficiaries will not be liable to pay any Inheritance Tax on them.
If you are planning to transfer qualifying assets worth in excess of £2.5 million: While your beneficiaries will receive 100% Inheritance Tax relief on any qualifying assets up to £2.5 million, they will be liable to pay effectively 20% Inheritance Tax on any qualifying assets exceeding the threshold when the assets transfer to them.
If you are married and planning to transfer qualifying assets in excess of £2.5 million to your spouse or civil partner: Any of the £2.5 million allowance which is unused when your spouse inherits your qualifying assets is carried over to your surviving spouse’s estate – meaning that their beneficiaries could receive assets of up to £5 million without incurring Inheritance Tax liability.
If you are unmarried and planning to transfer qualifying assets in excess of £2.5 million to your partner: The £2.5 million allowance for Inheritance Tax relief is non-transferable between unmarried couples – meaning that, while the £2.5 million allowance would apply to any qualifying assets transferred to your surviving partner as part of your estate (with any value in excess of this being liable for effectively 20% Inheritance Tax), any unused allowance cannot be carried over to their estate (meaning their beneficiaries will potentially become liable to pay Inheritance Tax).
If you are planning to gift your qualifying assets to someone in your lifetime: If you gift your qualifying assets to someone in your lifetime, they will be exempt from Inheritance Tax provided that you live for seven years after making the gift. However, if you were to pass away within seven years, the assets could then attract an Inheritance Tax liability – and, as the £2.5 million allowance applies from the point at which you made the gift during your lifetime, the allowance available for Inheritance Tax relief could potentially be reduced in cases where spousal exemption does not apply.
What steps can you take to prepare?
The changes might sound alarming, but there are plenty of options that our experts can explore with you.
When it comes to succession planning, it is never too early to start putting plans in place – and never too late to change them if the landscape shifts unexpectedly.
The changes highlight the importance of putting succession plans in place if you have not done so already, ensuring that any pre-existing provisions you have made still reflect your wishes in light of the changes, and keeping a watchful eye on the legislative landscape to make sure it stays that way.
Here are just a few considerations you should be thinking about in the light of the new legislation:
- Do you have qualifying assets worth £2.5 million – or does the growth trajectory of your business or farm mean that you could have in future?
- Who would you want to leave your qualifying assets to in your will – and is there sufficient time for you to make a lifetime gift instead?
- If you are married, what implications could transferring your qualifying assets to your surviving spouse or civil partner have for the long-term running of your business or farm?
- If you are unmarried, is your marital status something you would wish to re-evaluate in the light of the ability to transfer allowances being confined to married couples or those in civil partnerships?
Looking to prepare for Inheritance Tax changes and need a helping hand?
There are lots of considerations when planning for the future. Circumstances can change, and it can be difficult to know whether what feels like the right decision now will still be the right fit for you and your loved ones further down the line.
With an unrivalled nationwide team of experts, we will look at your situation from all angles to find a solution that works – both now, and in the future.
If you would like to find out more about how we can help you, please get in touch.