In a surprise announcement just before Christmas, the government announced a major change to Agricultural Property Relief (APR) and Business Relief (BR) reforms that will take effect from 6 April 2026.
The full 100% relief from Inheritance Tax (IHT) will now apply to the first £2.5m of qualifying assets – an increase of £1.5m from the previously announced £1m.
This means that a couple can now gift up to £5m of qualifying agricultural or business property during their lifetime tax-free, in addition to the standard IHT nil rate (if available). However, be mindful of other taxes such as Capital Gains Tax and SDLT. Always seek advice before making lifetime gifts.
The proposed reforms to IHT on agricultural and business assets were first announced in October 2024. In November 2025, it was announced that the new allowance could be transferred between spouses or civil partners; the announcement before Christmas was the third change in the proposed reforms.
HM Treasury has said that increasing the allowance to £2.5m will halve the number of Estates that will be affected by the reforms (and around 85% of Estates will pay no more IHT than they would have done without the reforms).
If you would like advice on how these IHT reforms could impact you, please do not hesitate to call.
