Entity Setup
UK Inheritance Tax Reforms: What Estate Planners Should Know Now
New UK inheritance tax changes from April 2025 reshape reliefs for farms and business property—find out who’s affected, how to adjust, and best estate structuring strategies.
By NomadicTax Research Team • 5-8 min read • November 15, 2025
## What’s Changing in UK Inheritance Tax from 2025
From **April 2025 onwards**, major reforms impact inheritance tax (IHT) thresholds and reliefs, particularly **Agricultural Property Relief (APR)** and **Business Property Relief (BPR)**. For estates combining business and agricultural assets exceeding £1 million beyond the nil-rate bands, relief is cut: full 100% relief on first £1m, then only **50% relief for amounts above that**. ([gov.uk](https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain?utm_source=openai))
Other reforms include inheritance tax treatment of **inherited pension pots**; from **April 2027**, inherited pensions will generally be subject to IHT. ([gov.uk](https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain?utm_source=openai))
## Who Is Affected
- Estates with combined business-or agricultural property over £1 million are hit hardest.
- Wealthy farmers and business owners planning to transfer large agricultural holdings or business assets.
- Beneficiaries expecting to inherit pension pots after 2027.
## Strategic Planning Moves Before These Changes
- **Make use of the £1m threshold**: before April 2025, consider transferring assets into structures or trusts to stay under the threshold.
- **Timely gifts and lifetime transfers** to avoid relief reduction; a move before legislation takes effect may preserve full relief.
- **Review pension beneficiary designations** as pensions inherited from 2027 may be taxable under IHT.
## Examples
- Example: Family farm valued £1.5m in business/agricultural assets. Under new rules, first £1m gets 100% relief; the remaining £500k only gets 50% relief ⇒ £250k becomes fully taxable.
- Estate with £500k pension pot inherited in 2028 will be included in the taxable estate under new rules.
## Actionable Estate Planning Tips
- Consult estate planning attorney or tax advisor sooner rather than later.
- Use **business ownership transfers** before April 2025 to lock in full relief if possible.
- Gifts & trusts: consider placing future business or agricultural property into trusts to reduce the taxable portion.
- Pensions: create wills and beneficiary documents that reflect new tax exposure.
These reforms signal government efforts to raise revenue from unearned or inherited wealth. For business and agricultural families, adjusting estate plans now could preserve millions in relief.