Case Studies

How Trusts and Non-Residents Are Affected by Recent UK Inheritance & Property Relief Reforms

A series of changes to UK inheritance tax, property reliefs, and non-resident rules will take effect from April 2026—learn what trustees and international individuals need to know now.

By NomadicTax Research Team • 5-8 min read • April 20, 2026

## Recent Reforms and What They Mean ### Agricultural and Business Property Reliefs (APR & BPR) - From **6 April 2026**, agricultural property relief and business property relief are reformed: the **100% relief** remains for the first **£1 million** of combined business and agricultural assets, but **above that threshold relief drops to 50%**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai)) - The **£1 million allowance** will be **transferable between spouses or civil partners**, helping estate planning. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai)) ### Business Asset Disposal Relief (BADR) & Investors’ Relief - These reliefs will see their **Capital Gains Tax rate increase** to match the **lower main rate** of **18%** starting 6 April 2026. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai)) ### Carried Interest Regime Overhaul - From 6 April 2026, **carried interest income** will sit fully within the **Income Tax framework**, moving away from CGT treatment. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html?utm_source=openai)) ### Inheritance Tax (IHT) & Trust-Related Anti-Avoidance - Budget 2025 included **anti-avoidance measures** targeting non-long-term UK residents and trusts. These ensure more equal treatment for overseas owners, especially of agricultural property. Effective from Budget Day for certain gifts or deaths, and fully from 6 April 2026. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai)) ## Who Is Affected? - Trustees and personal representatives managing estates. - Non-UK residents owning UK agricultural or business property via trusts or offshore structures. - Individuals with business/agricultural assets exceeding £1 million in value. - Those using carried interest (e.g. in private equity) for tax planning. ## Practical Considerations and Planning Opportunities - Estates expecting to exceed the £1 million threshold might benefit from **making lifetime gifts** before 6 April 2026, or restructuring property holdings. - Spousal transfers may utilize the new **transferable allowance**; plan together where both partners hold assets. - For carried interest, review how compensation is structured in partnerships/funds—may shift payout timing or entity classification. - Non-residents should assess **trust structures and ownership**, as offshore arrangements may face equalisation and trust exit charge reforms. ## Example Scenario **Scenario A:** A farming couple hold £1.5 million in business and agricultural assets. Under new rules, first £1 million gets 100% relief; next £0.5 million only gets 50%. Without careful planning, that could introduce a significant IHT liability. Spousal transfer of some assets before the change could preserve more relief. **Scenario B:** A fund manager receives carried interest payments handled through a structure giving CGT treatment. From April 2026, this income will be taxed as income tax—likely increasing the tax rate and affecting net returns. ## Key Action Steps Before April 2026 - Identify asset values and ownership structures now - Seek valuations if necessary - Consult with a tax adviser about trust or non-resident status - Review agreements related to carried interest or other tax-advantaged income streams - Consider gifting or transferring assets prior to the new rules if feasible > These reforms represent some of the most substantial shifts in UK wealth and estate taxation for years. Early planning is **essential**.