If you own a farm, land, or a family business, you may already be aware that inheritance tax (IHT) rules are set to change. Recent headlines have understandably caused concern, but the key message is this: there is no need to panic – but this is not something to ignore!
From April 2026, significant changes will take effect to Agricultural Property Relief (APR) and Business Property Relief (BPR). These reliefs have long played a crucial role in allowing farms and family businesses to pass from one generation to the next without triggering a substantial inheritance tax bill.
Understanding what is changing, and reviewing your plans now, can give you greater clarity, flexibility, and peace of mind for the future.
What Are APR and BPR?
APR and BPR are inheritance tax reliefs that can reduce, and in some cases eliminate the IHT payable on qualifying agricultural or business assets when someone dies. They can also apply to certain lifetime gifts that become chargeable on death.
Until now, qualifying assets could often pass 100% free of inheritance tax, regardless of value. For many farming families and business owners, this relief has been essential in keeping businesses intact, viable, and within the family.
What Is Changing from April 2026?
In the Autumn Budget 2024, the government announced that unlimited APR and BPR would come to an end. This means that under the revised rules, effective from April 2026:
- Each individual will have a £2.5 million allowance for qualifying assets eligible for 100% APR or BPR
- The £2.5 million cap applies to the combined value of qualifying agricultural and business assets
- Any qualifying value above £2.5 million will receive 50% relief
- This means the excess value may face inheritance tax at an effective rate of 20%
- Any unused allowance will be transferable between spouses and civil partners
In practical terms, this means a married couple or civil partners may be able to pass on qualifying assets worth up to £5.65 million inheritance-tax free, by combining:
- Two £2.5 million APR/BPR allowances, and
- Two £325,000 nil-rate bands (where available)
This represents a softening of the government’s original proposal, which included a £1 million cap that could not be transferred between spouses or civil partners. While the revised rules reduce the immediate impact, they still mark a significant shift for farming and business families.
Why These Changes Matter
For many families, particularly those with land-rich or asset-heavy businesses, these changes could result in a substantial inheritance tax liability where none was previously expected.
With this in mind, it is essential to:
- Review the value and structure of your assets
- Revisit wills, trusts, and succession plans
- Consider whether your existing arrangements still reflect your wishes
Plans that worked well under the previous rules may no longer achieve the outcome you expect.
A Review Today Can Protect Your Family Tomorrow
There is still time to act, but seeking advice early gives you more options and greater control.
Our expert solicitors working alongside your financial or tax adviser, can help you understand how the changes affect you and put a plan in place that reflects both your financial position and your family values.
Inheritance tax rules may be changing, but with the right guidance, you can still plan with confidence.
At Howard & Over, we’re Accredited Lifetime Lawyers. This means we are specialists in later-life and succession planning, with advanced training to support families, business owners, and farm owners through complex inheritance and estate planning matters.
If you are concerned about inheritance tax or planning for the next generation, get in touch with our experts today.