Increase in APR/BPR limit to £2.5m – what it means for business owners

The government announced in late December an increase in the combined Business Property Relief (BPR) and Agricultural Property Relief (APR) allowance to £2.5 million, marking a significant development for family-owned businesses and farms. This is up from £1 million that was initially announced in October 2024.

BPR and APR are cornerstone Inheritance Tax (IHT) reliefs, enabling qualifying business and agricultural assets to pass between generations with up to 100% IHT relief. While 100% relief is uncapped until 6 April of this year. The amended £2.5m limit provides additional headroom for family business, farms, and landed estates that may otherwise have faced an IHT exposure as asset values continue to rise.

From a planning perspective, the increase offers welcome flexibility. It reduces the immediate pressure to fragment ownership, using trust structures or lifetime transfers purely for tax reasons. For many families, it will allow succession planning to align more closely with their commercial objectives rather than being driven by tax constraints.

That said, reviewing your exposure to IHT and ensuing the tax efficient succession of businesses and wealth remains an important task. To qualify for BPR and APR assets must still meet strict qualifying criteria. Moreover valuations, ownership structures, and trading status will continue to be scrutinised by HM Revenue & Customs.

Overall, the £2.5m limit is a positive step, but proactive planning and reviews remains essential. We are of course happy to work with business owners to reassess their succession and estate plans in light of this further change to IHT ensuring they are well-positioned under the newly restricted relief.

If you have any concerns about how the change in the APR/BPR limit may affect you, please do get in touch with Steven Martin on 023 8046 1225 or email Steven Martin.