November 10, 2025
Article
From 6 April 2026, the Government is reforming Agricultural Property Relief (APR) and Business Property Relief (BPR). The key change is that 100% relief on combined agricultural & business property will be limited to the first £1 million of qualifying assets. Above that, relief drops to 50%, meaning an effective Inheritance Tax (IHT) rate (on the excess) of up to 20%, rather than the full 40%.
All businesses need to consider how to respond — financially, legally, and in terms of succession planning before the changes come into force.
I have summarised five areas below to focus on before the 6 April 2026:
1 Understanding the impact for your family
If you haven’t already, then the starting point needs to be understanding how the new rules impact your death estate.
To proceed effectively, it’s essential to engage with your professional advisers to obtain accurate valuations of land, buildings, property, and deadstock. This will enable a reliable IHT appraisal that clearly illustrates the impact of transitioning from the current rules to the new regime.
2 Cash flow planning
Once you understand your liability, you can consider ways of mitigating its impact on your family.
Exploring how you could pay this liability, and the impact on the business is extremely important. Many are looking at life insurance to help with the burden or are retaining assets that could be sold in the worst-case scenario, to pay the liability on death.
3 Updating Wills, Partnership and Shareholders agreements, and maximising relief
It is important to review your existing legal documents to ensure that they are future proof.
Not updating Wills to deal with the changes could cost a family the loss of a £1m allowance. This would create additional IHT liability of £200k.
Maximising IHT relief remains a key consideration. It’s therefore essential to ensure that the appropriate assets are held by the right individuals / entities and that partnership and shareholders agreements are kept.
4 Considering lifetime gifts and maximising allowances
Many businesses and families in tandem with the above are considering lifetime gifts to reduce IHT.
Gifts can be either outright, or via a trust. See Abi’s article for a detailed analysis of gifts into trust.
As with any gifts - to ensure they are effective - you must ensure that you do not retain benefit from that asset. You must also be comfortable with the loss of control and loss of income, that often comes with taking this next step.
5 Review business structures
Whilst considering the future, it is also important to ensure the business structure is future proof and assess if any changes will adversely impact your IHT position.
Switching to a limited company structure can offer significant IHT planning advantages, particularly through share discounting. However, it is important to also consider the adverse consequences of turning business capital into a director’s loan, and the potential loss of relief on some assets.
For more information surrounding the use of a limited company structure, please see the article below:
Will the use of Family Investment Companies be more prevalent from April 2026?
Summary
Every business, family, and individual have unique circumstances, so the impact of the rules — and the appropriate next steps — will vary from case to case. The key is to start engaging now, both with your advisors and among yourselves, to begin taking informed steps in the right direction. Also bear in mind there could still be further changes announced in the next budget, so any decision must be the right one for the long term future of the family and the business, independent of tax.