Entity Setup

Reforming Inheritance Tax Reliefs: What Business and Agricultural Property Owners Need to Know

Significant changes to Inheritance Tax (IHT) reliefs for agricultural and business property from April 2026 are coming; owners must adapt entity and estate planning strategies to avoid tax surprises.

By NomadicTax Research Team • 5-8 min read • November 21, 2025

## Overview of Upcoming IHT Relief Reforms From **6 April 2026**, reforms to **Agricultural Property Relief (APR)** and **Business Property Relief (BPR)** will change how estates and trusts claiming reliefs are taxed. Key changes include: - A **£1 million allowance** for the combined value of qualifying agricultural and business property in an individual’s estate—or in trusts—qualifying for 100% relief.([gov.uk](https://www.gov.uk/government/publications/reforms-to-agricultural-property-relief-and-business-property-relief?utm_source=openai)) - Above that £1 million, relief will apply at **50%** instead of the existing 100%.([gov.uk](https://www.gov.uk/government/publications/reforms-to-agricultural-property-relief-and-business-property-relief?utm_source=openai)) - The 100% rate is reduced to 50% for shares traded on recognised stock exchanges but not listed, and certain foreign exchanges not recognised.([gov.uk](https://www.gov.uk/government/publications/reforms-to-agricultural-property-relief-and-business-property-relief?utm_source=openai)) - Estates and trusts will have the option to **pay IHT by instalments over 10 years**, interest-free, for all property eligible for APR or BPR.([gov.uk](https://www.gov.uk/government/publications/reforms-to-agricultural-property-relief-and-business-property-relief?utm_source=openai)) ## Who Will Be Affected? - Large estates with significant holdings in agricultural land or private business assets will see higher IHT exposure. Estates over £1 million in qualifying property lose some relief. - Shares traded on certain exchanges (e.g., AIM or foreign unrecognised exchanges) now incur only 50% relief in many cases. - Trust property is impacted, especially trust property settled on/after **30 October 2024**, or subject to 10-year anniversary or exit charges post **6 April 2026**.([gov.uk](https://www.gov.uk/government/consultations/reforms-to-inheritance-tax-reliefs-consultation-on-property-settled-into-trust/reforms-to-inheritance-tax-agricultural-property-relief-and-business-property-relief-application-in-relation-to-trusts?utm_source=openai)) ## Strategic Actions to Consider - Use the £1 million allowance fully: ensure qualifying property is valued and accounted for so you maximise the relief. - If property is likely to exceed the threshold, plan whether to pass more value via lifetime gifts or adjust estate structure. - Check status of shares and their trading/listing status to determine relief rate. - Trusts should be reorganised or transferred cautiously, mindful of the anti-fragmentation rules and how allowance applies apportionately among trusts. - Installment option: use it to improve cash flow post-death or on trust exit/anniversary charges. ## Case Study Example **Scenario**: Farmer Mary owns a farm and business assets totalling **£1.5 million**. Of that, £1.2 million qualifies for APR or full BPR (private non-listed shares). Under reforms: - First **£1 million** receives full 100% relief. - Remaining **£200,000** of qualifying property receives **50% relief**, meaning £100,000 is deemed relievable, £100,000 subject to half relief. If Mary had placed assets into a trust established after 30 October 2024, these thresholds and rules apply similarly at exit or 10-year anniversary. ## Entity Setup Implications - Family companies holding qualifying agricultural land should review ownership structure—company share listing status may affect BPR relief. - Trusts: structure and settlement dates matter—property settled before or after key dates (30 Oct 2024, 6 April 2026) have different treatment. - Ensure valuation and documentation are robust if passes through business assets or trust distributions. ## Compliance Checklist - Identify property assets qualifying for full vs partial relief. - Assess share status if traded or listed/unlisted. - Determine whether trusts or estates need to file or report differently under new forms. - Monitor HMRC guidance and legislation drafts published ahead of April 2026. ## Conclusion These IHT relief reforms aim to **target reliefs more fairly**, ensuring huge estates cannot exploit unlimited reliefs while protecting family farms/businesses. Timely planning—especially for trusts and large estates—is essential to make the most of the new rules.