Entity Setup
Estate Planning under the Reformed Business & Agricultural Property Reliefs
Major reforms to Business Property Relief and Agricultural Property Relief will impact estates worth over £1m from April 2026—what estate holders need to understand.
By NomadicTax Research Team • 5-8 min read • April 18, 2026
## What the Reforms Entail
- Starting **6 April 2026**, for combined agricultural and business assets over **£1 million**, relief rate will **fall from 100% to 50%** on the portion above £1 million. Assets up to that threshold retain full relief. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai))
- Additionally, **inheritance tax (IHT)** exemptions and number of estates affected are limited—primarily wealthy estates (~2,000 estates annually) will bear additional tax. ([gov.uk](https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain?utm_source=openai))
## Implications for Estate Planning
- Estates previously expecting little or no IHT due to full relief now may face **IHT at 40%** on relief-denied portions.
- Estate holders need to assess combined agricultural & business holdings to see if they breach the £1m threshold.
## Actionable Steps
1. **Valuation review**: Obtain up-to-date valuations for business and agricultural property assets.
2. **Threshold management**: If holdings exceed £1m, consider restructuring or giving away assets below threshold levels during lifetime.
3. **Spouse/civil partner reliefs**: £1 million allowance may be **transferrable** between spouses/civil partners to maximise relief. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai))
4. **Use of trusts & lifetime gifting**: Review whether lifetime gifts or trusts can help mitigate exposure, while being mindful of new reporting or trust-based rules.
## Example
> John and Mary jointly own a farm (Agricultural Property Relief) and a small business. Business holdings valued at £1.5 million, farmland at £800,000. Combined value is £2.3 million, so the first £1 million gets **100% relief**, the remaining £1.3 million gets only **50% relief**. IHT payable on the unreduced portion could be substantial.
## Key Takeaways
- These changes are effective 6 April 2026—any estate plans made before then should account for the new relief limitations.
- Groundwork now (valuations, transfers, structuring) can preserve more of estate value.
- Professional advice from tax or estate planners strongly recommended for those near or above these thresholds.