In a surprise move, the government has announced a significant change to the forthcoming reforms of Agricultural Property Relief (APR) and Business Property Relief (BPR).
When the new rules take effect on 6 April 2026, the maximum value eligible for 100% relief will increase from the previously proposed £1 million to £2.5 million.
This change follows the government’s earlier announcement in the Autumn Budget 2025 that the combined 100% relief allowance would be transferable between spouses and civil partners, a notable shift from its previous position that the allowance would not be transferable.
What the announcements mean for farmers and business owners
Taken together, these two announcements materially change the position for those relying on APR and BPR. The introduction of transferability for the original 100% relief allowance, now combined with the increase in the proposed 100% relief cap from £1 million to £2.5 million, provides families with greater scope to structure succession in a way that preserves relief across generations without the level of restructuring that had previously been anticipated.
Under the revised measure, individuals will be able to pass on up to £2.5 million of qualifying agricultural or business property free of inheritance tax. For spouses and civil partners, the allowance effectively rises to £5 million, assuming the allowance is fully available on the second death. This significantly changes the potential exposure under the forthcoming rules, especially in comparison to the position originally proposed.
The government estimates that as a result of today’s announcement the number of affected estates claiming APR (including those also claiming BPR) will halve.
Recap of the reforms taking effect from 6 April 2026
Currently APR reduces the value of agricultural property and BPR reduces the value of business property when calculating inheritance tax. These reliefs may be given at either 100% or 50%, depending on the type and use of the asset, with no limit on the amount of relief that can be claimed.
From 6 April 2026, 100% APR and BPR will apply only to the first portion of combined qualifying assets, now £2.5m under the new announcement. Any value above this threshold will attract 50% relief.
Planning ideas
While the increased threshold and the transferability of the allowance are welcome developments, the reforms still represent a substantial shift away from unlimited 100% relief.
Ahead of the 6 April 2026 changes individuals and trustees should:
- Review their estate planning in light of the new £2.5m 100% relief cap and 50% relief thereafter,
- Consider how the reforms interact with lifetime gifting strategies, and
- Consider how asset ownership is structured
How we can help
The legislation is complex, and the most appropriate next steps depend on the specific circumstances and requirements of the individuals, trusts and beneficiaries involved.
If you would like to discuss how these changes could affect your business succession planning, estate planning, or trust arrangements, please contact us.
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