The Autumn Budget 2024 set out major upcoming changes to Inheritance Tax (IHT). Draft legislation published in July 2025 confirms that restrictions to Agricultural Property Relief (APR) and Business Property Relief (BPR) are expected to take effect from 6 April 2026.
These reliefs currently provide up to 100% protection from IHT on qualifying agricultural and business assets. The proposed reforms will significantly reduce the level of relief available for many individuals and families.
What Is Expected to Change?
A new £1 million allowance will apply to the combined value of agricultural and business assets that currently qualify for 100% relief. Anything above this allowance will be eligible for 50% relief, rather than 100%.
This allowance will sit alongside the existing nil-rate band and available exemptions.
For individuals, the £1m allowance will apply to:
- Property held at death
- Lifetime transfers to individuals within seven years of death
- Chargeable Lifetime Transfers (CLTs), including most transfers into trust
In addition, BPR will be restricted for certain shareholdings. From April 2026:
- Shares listed as not being on a recognised stock exchange (e.g. AIM shares) will qualify for 50% BPR, not 100%.
Impact: What This Could Mean in Practice
Consider an estate containing £2 million of shares in an unquoted trading company.
Under the current rules:
- 100% BPR applies
- No IHT is due on the shareholding
Under the proposed rules:
- £1 million receives 100% BPR
- The remaining £1 million receives 50% BPR
- £500,000 becomes part of the IHT-chargeable estate
The standard £325,000 nil-rate band can still be applied, but many estates will see a substantial increase in exposure.
What You Can Do Now
Although the rules are not yet final, early preparation is important. Key steps include:
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Assess your exposure
Work out how the proposed relief caps may affect your estate. This should include a full review of all assets, liabilities, and likely inheritance outcomes.
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Review your Will
Small amendments can sometimes improve the IHT position and reduce future liabilities.
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Consider lifetime planning
You may wish to look at potential restructuring, gifting strategies, business succession planning, or trust planning. These options need careful analysis to avoid unexpected tax consequences.
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Stay informed
These proposals are still subject to change. Any planning should remain flexible until the final legislation is confirmed.
How Beavis Morgan Can Help
Understanding the impact of these restrictions requires clear analysis and forward planning. Our specialists can support you by:
- Reviewing the likely IHT position under the new rules
- Modelling future tax liabilities
- Analysing business and agricultural assets to determine relief eligibility
- Advising on Wills and succession plans
- Structuring estates, businesses, and shareholdings in a tax-efficient way
- Guiding you through gifting, trust planning, and long-term wealth planning
For tailored advice, please speak with your usual Beavis Morgan contact or email info@beavismorgan.com.
