Proposed changes to inheritance tax

As announced at Autumn Budget 2024, the government has published draft legislation for proposed changes to inheritance tax to reform Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026 to make them “fairer and more sustainable”.

In addition to existing nil-rate bands and exemptions, APR and BPR will continue, but a cap will be introduced that will restrict the 100% relief to the first £1 million of combined agricultural and business property. The rate of relief will be 50% thereafter.

Relief will also be reduced to 50% (with no £1m allowance) for quoted shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM. The changes will take effect from April 2026.

In inevitable disappointment to business owners and farming communities, no significant changes have been made to these plans since the Autumn Budget 2024 announcement.

The government has, however, announced that it will not proceed with the proposed extension of the related property rules for qualifying property settled into multiple trusts.

In the proposed changes to Inheritance Tax it has also been announced that:

• the option to pay IHT by equal annual instalments over 10 years interest-free will be extended to all property which is eligible for agricultural property relief or business property relief.
• the £1 million allowance for agricultural property relief and business property relief will be indexed in line with CPI, but will remain fixed up to and including tax year 2029/30 in line with maintaining the IHT nil rate bands at current thresholds.

If you have any queries regarding the proposed changes to Inheritance Tax or receive advice from our Tax Accountants, please get in touch with Steven Martin on 023 8046 1225 or email Steven Martin.