Urgent Planning Required for Landowners and Business Owners
From April 2026, significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will fundamentally alter Inheritance Tax (IHT) planning for business owners and landholders in the UK.
Currently, these reliefs allow up to 100% exemption from Inheritance Tax on qualifying agricultural and business assets, enabling families to pass on wealth efficiently. However, the new rules will introduce a £1 million cap on 100% relief. Any value above this cap will only qualify for 50% relief, increasing the potential tax liability for estates that exceed this threshold.
This combined limit for APR and BPR cannot be doubled by claiming under each relief separately, which will significantly impact estates with high-value agricultural property or substantial business interests. For example, if an estate includes £3 million worth of agricultural land, the first £1 million will receive 100% relief, but the remaining £2 million will only receive 50% relief. This change could result in a substantial Inheritance Tax bill that would not apply under the current rules.
These changes not only reduce the tax efficiency of passing on agricultural and business assets but also pose a serious threat to the continuity of family farms and businesses. For many, the impact could be financially crippling, as Inheritance Tax at 40% would be charged on half of the estate’s value above the cap. Furthermore, unlike the nil rate band, the new £1 million allowance is not transferable between spouses. This limits the ability of married couples to fully utilise the relief, potentially leading to even higher tax liabilities on second deaths.
While the upcoming changes are undeniably challenging, there are strategic planning opportunities that can help mitigate their impact. These include restructuring ownership through partnerships or trusts, making lifetime gifts to reduce the taxable value of your estate, and reviewing existing wills and succession plans to adapt to the new rules. Additionally, maximising other available reliefs, such as the annual gift allowance or the residence nil rate band, could help alleviate the tax burden.
With the April 2026 deadline approaching, proactive planning is essential to protect your wealth and secure your family’s financial future.
At Simmons Gainsford, we understand the complexities of these changes and are here to help you navigate them effectively. Our team of experienced tax consultants can provide bespoke strategies tailored to your unique circumstances. Please contact us today to schedule a complimentary consultation: 01825 746 888 / mail@sgllp.co.uk
Disclaimer:
This article is for general information purposes only and does not constitute investment, pensions, or financial advice. Simmons Gainsford is not authorised to provide regulated investment or pensions advice. Should you require advice in these areas, we would be pleased to introduce you to our dedicated financial services team, who are authorised to assist with your specific needs.