Tax Planning
Inheritance Tax Reliefs Raised: How Farms & SMEs Should Respond Pre-April 2026
From 6 April 2026, the threshold for 100% relief for agricultural and business property will rise to £2.5 million—consulting businesses need to adjust their planning strategies accordingly.
By NomadicTax Research Team • 5-8 min read • April 28, 2026
## What’s Changing in Inheritance Tax (IHT) Reliefs?
As of 6 April 2026, UK law increases the **Agricultural Property Relief (APR)** and **Business Property Relief (BPR)** threshold from £1 million to **£2.5 million per estate**. Above that amount, you’ll receive only **50% relief** on qualifying assets. ([gov.uk](https://www.gov.uk/government/news/inheritance-tax-reliefs-threshold-to-rise-to-25m-for-farmers-and-businesses?utm_source=openai))
The relief is **transferable between spouses or civil partners**, meaning a married couple can now pass up to **£5 million** of qualifying farming or business assets without IHT where both thresholds are unused. ([gov.uk](https://www.gov.uk/government/news/inheritance-tax-reliefs-threshold-to-rise-to-25m-for-farmers-and-businesses?utm_source=openai))
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## Who This Impacts Most
- **Family farms**, rural businesses with land & equipment, and long-standing small business owners holding property. Assets exceeding £2.5 million will start to see IHT at **effectively 20%** on the excess. ([moneyweek.com](https://moneyweek.com/personal-finance/inheritance-tax/business-owners-consider-before-inheritance-tax-change?utm_source=openai))
- Estates passing assets above that cap—for example, property or machinery—must consider whether to gift assets before passing, or restructure ownership.
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## Planning Strategies Before 6 April 2026
- **Review your estate’s qualifying assets**: calculate current business & agricultural property values. If close to or over £2.5 million, consider steps pre-April 2026.
- **Transfer assets into spouse’s name** if your spouse’s threshold hasn’t been used. That creates potential for up to £5 million relief combined. ([gov.uk](https://www.gov.uk/business-relief-inheritance-tax/what-qualifies-for-business-relief?utm_source=openai))
- **Consider gifting or moving assets into qualifying trusts**, though beware of impact on Control and ownership tests (must own/operate business two years before death to qualify). ([gov.uk](https://www.gov.uk/business-relief-inheritance-tax/what-qualifies-for-business-relief?utm_source=openai))
- **Update valuations** with professional appraisals—asset value growth could push you above thresholds without clear awareness.
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## Practical Example
**Farm owner Jane** owns land, buildings, and farm machinery totalling **£3 million**. Under old rules, she’d get full relief on the whole lot. Under new rules, **£2.5 million gets 100% relief**, and the remaining **£500,000** only gets **50% relief**—meaning IHT on £250,000 instead of none.
If Jane is married and her spouse has not used their threshold, they could structure inheritance so each uses £2.5 million—jointly covering £5 million. That would completely protect Jane’s assets from IHT.
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## Actionable Insights
- Arrange your will with current rules in mind—ensure spouse transfers are clearly specified.
- Revisit business or farm accounting structures—are they held in trust, partnership, or owned individually? Ownership form impacts relief eligibility.
- Keep detailed evidence of business use, length of ownership, and activity—as HMRC will check compliance closely.
- In some cases, accelerated gifting (during lifetime) may reduce exposure, but be careful of gift-with-reservation rules and loss of control.
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## Potential Risks & Considerations
- Valuations can be disputed—late evidence or over-optimistic values may be challenged.
- Estates over simplified thresholds risk under-planning—assets that once qualified fully may now incur IHT on the excess.
- Reorganising ownership or gifting may have tax costs elsewhere (capital gains, loss of control, or gift tax consequences).
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This policy change sharpens the boundary between “ordinary” estates and those facing increased IHT on significant farming or business assets. With the threshold rising, many estates once exposed may now have breathing room—but only **if you act ahead of 6 April 2026**.