The Autumn 2024 Budget and the subsequent Finance Act
2026 have been the subject of many conversations, especially in so far as it affects inheritance tax (IHT). The said budget set the scene for a raft of proposed legislative changes in relation to Inheritance tax and estate administration. Of significance is that the budget introduced changes to the agricultural property relief (APR) and business property relief (BPR). This note seeks to give a summary of these changes that came into force on 6 April 2026 through the Finance Act, and their impact on estate administration and calculation of IHT post 6 April 2026.
Agricultural Property Relief and Business Property Relief
Agricultural Property Relief (APR) and Business Property Relief (BPR) have over the last years been used to reduce the value of agricultural property and business property when calculating IHT. Prior to 6 April 2026, qualifying business and agricultural property could obtain relief of up to 100% without any monetary limit.
Under the Finance Act 2026, from 6 April 2026, the general rate of relief for relevant business property and the agricultural value of agricultural property is now 50%, with the 100% rate limited to a relief allowance of £2.5 million. From there on, a 50% relief will apply on the value of assets that qualify for APR or BPR but above the £2.5 million limit. It is also important to note that the £2.5 million allowance will be frozen until 6 April 2031 then index-linked to the Consumer Prices Index thereafter.
Any unused allowance can be transferred between spouses and civil partners. Further, this is in addition to the already existing nil-rate bands and exemptions.
How can we help?
As a businessperson or a farmer, you may be worried about how this affects you and the future of your business and loved ones. These reliefs will become critical during the will drafting or assessment of IHT. As part of our Wills and probate service at BG LLP, we will help to ensure that the correct reliefs and allowances are applied. We are also there to advise on any further changes to the reliefs as the legislation surrounding these aspects will continue to evolve.
