Budget 2025 Changes You Need to Know
As announced in Budget 2025, several reforms take effect from 6 April 2026 that significantly change incorporation relief, agricultural property relief (APR), and business property relief (BPR). (gov.uk) These changes affect anyone transferring a business to a company, owning agricultural or business assets, or planning to pass property via inheritance.
What’s New with Property Reliefs
- The nil-rate combined allowance for 100% relief under APR and BPR is fixed at £1 million until 5 April 2031. (gov.uk)
- Any usage beyond that £1m will be charged at 50% relief. (gov.uk)
- The allowance is now transferable between spouses and civil partners. (gov.uk)
Incorporation Relief Changes
- For business asset transfers into a company on or after 6 April 2026, incorporation relief is no longer automatic — you must make an active claim. (gov.uk)
- The tax legislation (Finance Bill 2025-26) includes this requirement. (gov.uk)
Planning Tips for Businesses, Farmers & Estate Owners
- If you plan to transfer assets to a company or restructure ownership, initiate claims before 6 April 2026, or ensure your inclusion of incorporation relief eligibility.
- For estates with APR or BPR-qualifying assets near or above £1 million valuation: consider interspousal transfers to maximise the relief.
- Keep strong documentation showing nature of the asset, dates of ownership, and use in trade, if relevant — HMRC scrutiny likely to increase.
- For farmers and landowners, revaluate valuation timing: valuation at or after 6 April 2026 may yield lower relief on excess values.
Example Scenario
Farmer A owns agricultural land valued at £1.3 million. Under previous rules, entire amount may have qualified for APR. Under new rules, first £1 million gets 100%, £300,000 qualifies only for 50% relief. But if land is in a jointly owned farm with spouse, marriage transfer may help maximise utilisation of both allowances.
Business owner transferring a sole proprietorship into a limited company: must claim incorporation relief explicitly. If left unclaimed, HMRC won’t automatically grant relief.
These changes offer both challenge and opportunity; early planning and clear claims will ensure you optimise reliefs and don't miss out.