What’s changing
Starting 6 April 2026, UK Inheritance Tax rules for APR and BPR reliefs are changing significantly:
- The combined allowance for 100% relief under APR and BPR per individual is set to £2.5 million. (taxscape.deloitte.com)
- Any qualifying agricultural or business assets above £2.5 million will qualify only for 50% relief, rather than full relief. (taxscape.deloitte.com)
- For married couples or civil partners, the allowance can be combined so that together they can pass up to £5 million at 100% relief, where applicable. (bdo.co.uk)
Why this matters
This reform reduces the relief amount for those with larger estates and business holdings, raising potential Inheritance Tax exposure. International and domestic landowners, family-owned businesses, farms and trusts are all impacted. (kpmg.com)
What you should do now
Prepare ahead to minimise tax costs:
- Review current estate and asset structure — identify qualifying assets, their value, and whether advice should restructure holdings before the sunset date.
- Update succession planning, including wills, trusts, and gifting strategies, while full relief still applies, especially for assets likely to exceed the £2.5m threshold. (kpmg.com)
- Consider instalment options — HMRC extends instalment payment eligibility for qualifying assets under BPR/APR, but be aware of interest implications. (kpmg.com)
- Review valuation data — ensure that current asset valuations are correct and defensible for Inheritance Tax calculations.
Case example
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Scenario: Jane owns farm land valued at £3 million not under a company, with no other business or agricultural property. Under old rules, she'd have gotten 100% relief on all of it. Under new rules:
- £2.5 million = 100% relief
- £0.5 million = relief at 50% → she’d pay IHT on half the value above £2.5 million.
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To mitigate, Jane may consider gifting some land before 6 April or adjust her trust structure so that multiple trusts (if established before later cutoff dates) each have a full £2.5 million allowance. (kpmg.com)
Bottom line
If you own or expect to inherit farm, business, or unquoted trading company assets, these new rules mean action is needed before 6 April 2026. Consult estate planning experts, update legal documents, and take steps now while the higher relief still applies.