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From 6th April 2026, the inheritance tax landscape has shifted, making careful succession planning of even greater importance. What is the most significant of these changes? The answer to that is the reform of Agricultural Property Relief ("APR") and Business Property Relief ("BPR").
What is APR and BPR?
APR and BPR are both forms of relief on certain assets that enable estates to reduce the value of those assets for inheritance tax purposes. APR, as the name suggests, applies to qualifying agricultural assets and is intended to allow the passing down of agricultural property to the next generation. BPR provides a similar form of relief for qualifying business assets. BPR applies, for example, to a business or interest in a business (such as partnerships or LLPS).
Before now, for assets that qualified for APR and BPR inheritance tax relief could be claimed at the rate of 50% or 100%, subject to certain criteria being met, without any cap.
What happened and what is the position now?
In 2024, the government, in its Autumn Budget, announced a seismic change and announced plans to impose a £1 million cap on assets that were eligible for the 100% APR and BPR allowance. This prompted outcry in various sectors and, particularly so, the farming community. Following extensive lobbying, in December 2025, the government increased the cap of £1 million to £2.5 million.
So, where are we now?
With effect from 6th April 2026, the position now is that individuals are subject to a £2.5 million cap on the value of their assets they can pass down which qualify for 100% APR and BPR.
If the allowance is exceeded, the surplus will attract a tax liability but there will be 50% relief (so, in effect, an inheritance tax rate of 20% will apply).
The allowances can be passed on to a surviving partner (for married couples or civil partners) and this cap is in addition to nil rates bands and exemptions so, by combining the reliefs, potentially a couple could pass on £5.65 million tax free.
What should I be doing now?
It is never too early to start thinking about succession planning and as these changes will trigger a tax liability that previously may not have occurred, for those affected individuals, having a succession plan in place and keeping it under review is possibly even more important now than ever. Acting now could help protect your family and your business in years to come.
As a starting point, it may be prudent for families that would look to take advantage of APR and BPR relief to have their assets re-valued to check whether they will now trigger an inheritance tax liability and for those who do not have one (or have not reviewed theirs for a long time) it may be wise to consider making a Will or to have their Will reviewed to make sure their succession arrangements are as efficient as they can be.
At Colman Coyle, our private client team has considerable experience in estate planning which includes, if necessary, the creation and advising on trusts. Whether you need a relatively straightforward arrangement or something more complex, we have the experience and expertise to be able to work collaboratively with you and can help you find an arrangement that assists you and secures the needs of your family and your business in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
