The Autumn Budget brought major changes for those relying on Agricultural Property Relief (APR) and Business Property Relief (BPR).
With new Inheritance Tax (IHT) rules due to take effect from April 2026, farmers, business owners and AIM investors could face larger tax exposures when passing assets to the next generation.
With additional reforms confirmed in the Chancellor’s most recent statement, now is the ideal time to revisit estate plans and consider whether existing arrangements still achieve the intended outcomes.
What has changed for APR and BPR?
The Chancellor announced that the unused portion of the new £1 million allowance for the 100 per cent rate of APR and BPR will be transferable between spouses and civil partners. Importantly, this applies even where the first death occurred before 6 April 2026.
This brings the allowance broadly into line with the rules for transferring the IHT nil-rate band and should provide reassurance to families concerned about losing valuable relief.
However, relief above the £1 million threshold will only attract the 50 per cent APR or BPR rate.
Once the combined allowances – the nil-rate band, residence nil-rate band and APR/BPR – are exceeded, estates may face a 20 per cent IHT charge on the excess.
For couples, the effective ceiling can reach around £3 million, which marks a notable shift for families who previously anticipated that business or agricultural assets would pass down free of IHT.
How might this impact your estate?
These reforms mean many people will need to act quickly to ensure their estate planning remains effective before the April 2026 deadline. Key risks arise where:
Those who assumed that APR or BPR would eliminate IHT entirely may now find that part of their estate risks falling within the taxable range.
Exploring lifetime gifting, restructuring ownership or reviewing business and partnership interests may help mitigate the impact.
Taking the next step
Protecting family wealth in light of these new limits requires careful assessment and timely action. The earlier you review your position, the more options will be available.
