What’s Changing?
As part of the Autumn Budget 2024, the UK government has introduced reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) under Inheritance Tax (IHT), effective 6 April 2026. These include:
- A combined £1 million allowance for 100% relief to apply to all qualifying agricultural and business property in an estate; anything over that amount will only receive 50% relief.
- Shares designated as “not listed” on recognised stock exchanges will receive only 50% relief at all levels, no longer 100%.
- The allowance similarly applies to qualifying property in trusts and for lifetime gifts, with transitional rules for transfers or gifts made on or after 30 October 2024 when the donor dies on or after 6 April 2026. (gov.uk)
Implications in Practice
- Suppose your farm (worth £1.5 million) is wholly qualifying APR property. Under new rules, £1 million gets 100% relief, remaining £0.5 million only 50% relief. IHT would then apply to the £0.5 million slice.
- If you hold >£1 million total of APR + BPR across estate, careful planning between spouses or through lifetime giving could help utilise the threshold efficiently.
- For trust-held assets transferred after 30 October 2024, those assets will be assessed under the new regime if the settlor dies after 6 April 2026—so earlier gifts matter.
Practical Steps & Strategies
- Early estate planning: consider gifts before 30 October 2024 if death occurs after 6 April 2026—though today past that date, but long-term planning for trusts and succession still crucial.
- Spousal transfers: reliefs between spouses remain valuable. Ensure valuation and timing align to maximise 100% relief for couple estates.
- Asset classification: confirm whether shares are “listed” or “not listed” under the new checking rules to understand relief eligibility.
- Use of trusts: review existing trusts aged near their 10-year anniversaries since the new rules extend to exit charges on trusts with qualifying property.
Caveats & Things to Watch
- The reliefs are only one part of IHT planning—don’t forget nil-rate bands, residence nil-rate band, charitable giving, and other exemptions.
- Valuations are critical: being off by a few hundred thousand could change relief from 100% to 50% on that portion. Engage professional valuers.
- Rule changes around ‘not listed’ shares may catch businesses using AIM or other smaller exchanges; double-check your company’s classification.
Actionable Advice
- Inventory your estate’s APR/BPR qualifying assets now—list values and whether listed/unlisted.
- If you run a business held in unlisted shares, check if restructuring to go onto a recognised stock exchange could help where beneficial.
- Meet with fiduciary or tax-estate planners to map out timing of transfers, wills, and trust deeds in light of these thresholds.
Why It’s Critical
- For beneficiaries and estate owners with high value farm, business, or share portfolios, failure to plan could result in large unexpected IHT bills.
- These rules are not temporary window-dressing—they fundamentally reshape how APR and BPR work long-term, including in trusts and lifetime transfers.