The changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) were first announced in the 2024 Autumn Budget, allowing reasonable time to pass the Bill through Parliament and are anticipated to receive Royal Assent before the new rules come into effect in April 2026.
As of 6 April 2026, significant reforms to APR and BPR will come into effect regarding the treatment of the reliefs for Inheritance Tax (IHT) purposes following recent consultations and revisions announcements.
What’s changing?
Until now, both APR and BPR could potentially receive 100% relief from IHT if assets met qualifying conditions; however, from April 2026, this is changing.
- Only the first £2.5 million per person of combined qualifying APR/BPR will get 100% relief from IHT.
- Any qualifying value above £2.5 million will receive relief at 50%, meaning an effective IHT charge of 20% IHT on the value above the allowance that still qualifies for APR/BPR.
- The option to pay IHT on APR/BPR property by annual instalments over 10 years, interest-free.
This cap replaces earlier proposals, which had initially set the figure at £1 million before widespread industry feedback led to an increase to £2.5 million.
What does this mean for couples?
The allowance is intended to be transferable between spouses and civil partners; therefore, a married couple could potentially benefit from up to £5 million of qualifying assets, which is much more appropriate given the original £1 million allowance.
Gifts made since October 2024
The government has also set out rules that can affect some families if there have been gifts made on or after 30 October 2024 and you die before 6 April 2026. This means the allowance would be tapered if the transferor has died within 7 years of making the gift. We recommend that you speak to us for further guidance.
The changes made to APR/BPR represent some of the most significant reforms to IHT reliefs in recent years.
- Larger estates will now face greater IHT exposure on property over £2.5 million
- Estate planning strategies that previously relied upon 100% APR/BPR may now need to be reviewed and adjust the succession plan accordingly.
- We recommend consulting a tax specialist and valuing property
- We advise to consider gifting and trust strategies and revising Wills if necessary.
If you wish to speak to us to update your Will, or general advice regarding APR and BPR, then please contact us today, and we will be able to assist.
01256 844888 or enquiries@lambbrooks.com