Entity Setup
Entity Setup: Business Reliefs and Inheritance Tax Changes from April 2026
Notable changes to business and agricultural property reliefs, along with inheritance tax scope expansions, are effective from 6 April 2026. Critical for estate planning.
By NomadicTax Research Team • 5-8 min read • May 8, 2026
## Key Changes in IHT & Business Reliefs
- **Business Property Relief (BPR)** and **Agricultural Property Relief (APR)** reliefs are capped at **£1 million** at the higher rate. Transfers between spouses will be permitted under certain conditions. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai))
- From **6 April 2026**, business and agricultural assets can fall into **Inheritance Tax (IHT)** scope when previously excluded; where reliefs are reduced or limited. ([tax.org.uk](https://www.tax.org.uk/new-tax-year-new-rules-what-s-changing-this-april?utm_source=openai))
## Implications for Entity Holders and Estates
| Entity Type | What’s Changed |
|---|---|
| Family farms, family business owners | Larger estates may now face IHT on business assets; relief caps could affect transfers. |
| Trusts holding APR/BPR-qualifying assets | Must review whether assets still qualify under tightened caps. |
| Partners or spouses | Spousal transfers may mitigate IHT exposure under revised reliefs where allowed. |
## Planning Strategies Going Forward
- Review total business or agricultural asset values well ahead of any planned inheritance or transfer. If value exceeds new caps, consider restructuring ownership or gifting prior to 6 April.
- Utilize reliefs conservatively: ensure that only genuinely qualifying assets are claimed under BPR/APR.
- Spousal transfers: where reliefs remain transferable, see if moving assets between spouses before death or upon gifting helps preserve relief.
- Consider trusts—but beware IHT charges for certain types of trust structures with large unspent pension pots from April 2027. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai))
## Example
James owns a family-run agricultural property valued at £1.5 million. Pre-6 April 2026, his estate might have expected **100% APR** relief. Under the new rules, anything above the £1 million cap will not get full relief; estate may pay IHT on £500,000 not covered.
If James transfers part of the asset to his spouse, and the relief is indeed transferable, it could help to reduce exposure when the estate eventually faces IHT.
## Practical Recommendations
1. **Valuation check**: Get accurate valuations of business & agricultural assets now.
2. **Plan asset transfers or gifts** well ahead of time, especially for high-value estates likely to be above relief caps.
3. **Review estate or corporate structure**—incorporation, trusts, or partnership setups may influence relief eligibility.
4. **Update wills and succession plans** in light of these capped reliefs and expanded IHT scope.
These changes underscore the importance of forward-thinking entity and estate structuring. For those holding qualifying assets, early action can mean substantial savings.