IHT reliefs for business owners and farmers

The government is pressing ahead with plans to reform agricultural property relief (APR) and business property relief (BPR) from 6 April 2026. These are important Inheritance Tax (IHT) reliefs that currently mean up to 100% relief is available on the full value of qualifying assets.

As announced in last year’s Budget, from April 2026, this 100% relief will be capped at a combined £1 million of agricultural and business property, with any excess qualifying only for 50% relief. The effective rate of IHT on qualifying assets in excess of £1 million is therefore increasing to 20%.

However, Budget 2025 did provide some good news. It added that, from 6 April 2026, any unused APR or BPR allowance will become transferable to a surviving spouse or civil partner. This makes it like the nil-rate band and residence nil-rate band for IHT. As a result, couples may be able to pass on up to £3 million of qualifying agricultural or business property free of IHT.

Whist the government is better targeting these reliefs to make them fairer, aiming to protect small family business and farms, careful planning is always essential.

Complex transitional rules mean that gifting assets before 6 April 2026 may not necessarily have the desired effect to improve the situation.

Please speak with us for personalised advice on the best way to organise your estate where business or agricultural assets are involved. Please do get in touch, call Steven Martin on 023 8046 1225 or email Steven Martin.