Planned Inheritance Tax Relief Restrictions from April 2026

In the Autumn Budget 2024, the Chancellor announced planned changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), which currently provide up to 100% relief from Inheritance Tax (IHT) on qualifying agricultural and business assets.

Draft legislation published in July 2025 sets out the expected rules, which are due to come into effect on 6 April 2026.

What’s expected to change?

• A new £1 million allowance will apply to the combined value of business and agricultural property assets that qualify for 100% relief under APR or BPR.

• Where the combined value exceeds £1 million, the rate of relief will drop to 50% on the value above the allowance.

• The £1 million allowance will apply to:

  • Property in an estate at death

  • Lifetime transfers to individuals in the seven years before death

  • Chargeable Lifetime Transfers (CLTs), such as most transfers into trust
    

Additionally, BPR will be reduced to 50% on shares that are ‘not listed’ on recognised stock exchanges. This means that 100% relief will no longer be available on AIM shares.

What is the impact?

Consider an example:

An individual’s estate includes shares in an unquoted trading company valued at £2 million.

• Under the current rules, 100% BPR applies, so none of the shares are subject to IHT.

• Under the proposed rules:

  • £1 million of BPR remains at 100%

  • The remaining £1 million qualifies for 50% BPR, leaving £500,000 subject to IHT

  • The £325,000 nil-rate band would still apply to offset the remaining estate

This change could significantly increase IHT liabilities for those with larger business or agricultural estates.

What can be done now?

Although the proposals are not yet law, there are steps you can take to prepare:

1. Assess potential exposure: Estimate your potential IHT liability under the new rules by reviewing all likely assets, liabilities, and how your estate will be distributed under your Will.

2. Review your Will: Some simple changes could improve your overall IHT position and make planning more effective.

3. Plan carefully: Early preparation allows you to explore options and strategies once the final rules are confirmed.
   

It is important to note that planning is limited until the final legislation is confirmed, but being proactive now can help you understand potential implications and avoid surprises.

At SJC, Chartered Accountants, we can help you assess your estate, review your Will, and consider strategies to manage potential IHT exposure.

If you think these changes may affect you, contact us to discuss your situation and explore your options.