What Reformed in April 2026?
From 6 April 2026, Business Property Relief (BPR) and Agricultural Property Relief (APR) adjustments mean that while up to £2.5 million per person of qualifying business or agricultural assets still enjoys 100% relief, any amount above that threshold will attract only 50% relief. (kpmg.com) These changes significantly affect family-owned businesses, farms, and estates that were previously structured assuming full relief.
Case Background: The Roberts Farm Estate
- Pre-reform: The estate’s farm land and business interest assets totaled £4 million. Under old rules, the full amount received 100% relief, resulting in zero IHT on those assets when transferring to heirs.
- Post-reform: First £2.5 million gets 100% relief; the remaining £1.5 million receives only 50% relief—effectively increasing IHT exposure on that slice to ~ 10% on that portion (assuming a 20% IHT rate before relief).
What You Should Do Now
- Value your assets: Get current valuations of business and agricultural assets to assess which portion lies above the relief thresholds.
- Consider lifetime gifts: Transfer assets during your lifetime to make use of relief thresholds and possibly utilize spouse or civil partner transfers.
- Trust structures: If holding assets via trusts or through multiple entities, review which trusts are impacted and how relief allowances are allocated. Trusts created after 30 October 2024 may have shared allowances; older trusts may have separate allowance capitals. (kpmg.com)
- Estate funding for IHT: Prepare for possible IHT liability. Deciding how to raise funds (e.g. insurance, sale of assets) is critical.
Bigger Picture & Strategic Insights
- These reforms are part of broader moves to raise revenue, tighten reliefs, and encourage fairer IHT across wealth levels. (armstrongwatson.co.uk)
- They underscore the importance of succession planning—proactive rather than reactive strategies are now essential.
- For business owners, passing on assets via shares or via holdings of trading companies should be understood in light of new relief caps.
Takeaway: If you own substantial business or agricultural property, your estate planning—including trusts, gifting strategies, and wealth transfer mechanisms—needs to be revisited and possibly restructured before penalties or higher IHT become unavoidable.
Category: Case Studies