Agricultural Property Relief (APR) and Business Property Relief (BPR) currently provide generous inheritance tax (IHT) benefits, offering up to 100% relief from IHT on qualifying assets without any upper limit. This means that farmland, farm buildings, cottages used for farming, and trading business assets (including unquoted shares and AIM-listed shares) can pass free of inheritance tax if certain conditions are met.

What is changing from 6 April 2026?

From 6 April 2026, APR and BPR will be capped at £2.5 million per person or qualifying trust, with any excess value receiving 50% relief (effectively 20% inheritance tax compared to the usual 40%). Previously, there was no upper limit. The allowance, as with other IHT allowances, is transferable between spouses, so a couple can have up to £5 million of qualifying APR and BPR assets which they can pass on before incurring an IHT liability. AIM (Alternative Investment Market) and unlisted shares will only qualify for 50% relief even within the cap. The cap will apply not only to individuals but also to trusts. Tax on APR/BPR assets can be paid in interest-free instalments over ten years. 

What do I need to do?
These changes mean that farms and family businesses with substantial assets could face higher inheritance tax bills, so planning early is essential. Here is what you should be doing if you think these changes will affect you:

• Review your assets – what is the value of your APR/BPR assets?
• Review (or make!) your Will. This is the best planning tool at your disposal.
• Review any lifetime planning already in place and consider the use of trusts for forward planning to make use of the allowance.
• Discuss with your financial advisor whether your AIM shares are still the right place for your money.
• Explore whether gifting assets now is an effective strategy for you. Do you have any surplus income you could be gifting to reduce your IHT bill on your death?
• If there will be IHT to pay on your estate, how will that be funded?

Please get in touch with our team for further advice or information.