Disappointingly, the Government’s Autumn Budget made no substantial changes to reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) that will take effect from 6 April 2026, but there was some good news for families affected by those reforms.
As announced in the Autumn 2024 Budget, 100% IHT relief for qualifying APR and BPR assets will be limited to an individual allowance of £1 million from April 2026. Over and above that, qualifying APR and BPR assets will qualify for just 50% relief from IHT. It effectively means farming and family businesses can pass on £2m of farmland and assets to the next generation free from inheritance tax.
The Government’s original proposals did not, however, allow any unused part of that £1 million allowance to be transferred between spouses.
The Chancellor, helpfully, announced in her Budget a concession that will now allow unused parts of that £1 million allowance to be transferred between spouses and civil partners, much in the same way as the Nil Rate Band and Residence Nil Rate Band. However, she also announced that the threshold for this relief will be fixed at this level for one further tax year from 2030 to 2031.
This concession does not increase the overall relief to married and civil partners, but it ensures that unused allowances on the first death are preserved. Helpfully, it applies retrospectively, meaning that this applies to families where the first spouse or civil partner died before 6 April 2026.
Whilst this change will be welcomed, farming and family businesses need to understand and plan for the changes that take effect from April 2026.
We recommend:
- A review of any family businesses qualifying for these reliefs to understand how assets are owned within the family, their value, potential exposure to IHT and consideration of other reliefs which may apply.
- Consider making lifetime gifts to ensure the £1 million individual allowance is used and not lost. The gifts out of surplus income relief can also be valuable and is often underutilised.
- A review of any existing trust arrangement and exploring how new trusts can be used to mitigate against these changes There is only a small window of opportunity between now and 6 April 2026 where the transitional rules apply.
- Consider how future IHT liabilities might be funded, including the use of insurance policies.
These changes are complex and will have far-reaching implications and farming and family businesses are advised to take advice as early as possible.
Contact our Private Client Solicitors
If you are in need of advice or assistance on any of the legal issues mentioned in this article, please contact any member of our experienced Private Client team on 020 7631 4141 or email privateclient@bishopandsewell.co.uk
The above is accurate as at 27 November 2025. The information above may be subject to change.
The content of this note should not be considered legal advice, and each matter should be considered on a case-by-case basis.
