From 6 April 2026, farmers and business owners were expecting the amount of Agricultural Property Relief (APR) and Business Property Relief (BPR) available at the highest rate of 100% relief to be restricted to a cap of £1 million.

However, following sustained feedback from the farming community, family businesses and professional advisers, the Government has now announced further changes to the proposed reforms.

On 23 December, the Government confirmed that the new cap for 100% relief will be £2.5 million, rather than £1 million. This represents a significant shift in policy and materially alters the planning position for business owners and landowners ahead of April 2026.

The Government’s announcement makes it clear that while unlimited relief will still be removed, the intention is to protect more farms and family businesses, while ensuring that the most valuable estates make a greater contribution through Inheritance Tax.

inheritance tax changes family business

What Is Business Property Relief (BPR)?

Business Property Relief is an inheritance tax relief that applies to qualifying business assets. It was introduced in 1976 to prevent families from being forced to sell trading businesses simply to fund an inheritance tax bill.

For many owner-managed and family businesses, BPR has been central to long-term succession and estate planning.

What Is Agricultural Property Relief (APR)?

Agricultural Property Relief is a similar inheritance tax relief designed to help farmers and landowners pass on agricultural property either during their lifetime or on death without triggering a significant tax charge.

While A4G does not primarily advise farming clients, the APR reforms are relevant because the new allowance applies across both APR and BPR combined.

Key facts: Inheritance Tax, BPR and APR from 6 April 2026

From April 2026, any qualifying assets above £2.5 million will receive 50% relief, resulting in an effective inheritance tax charge of 20% on that excess value.

This allowance will apply to:

  • Individuals

  • Trusts

  • Lifetime gifts and transfers on death

The allowance will:

  • Refresh every seven years for lifetime gifts

  • Refresh every ten years for relevant property trusts

  • Be index-linked from April 2031, subject to future government legislation

Unused allowance will be transferable between spouses or civil partners, even where the first death occurs before 6 April 2026.

BPR and APR compared – Before and after April 2026

Area

Current Rules (Pre-6 April 2026)

New Rules (From 6 April 2026)

100% relief limitNo monetary cap£2.5 million combined APR/BPR allowance
Relief above the limitNot applicable50% relief (effective 20% IHT charge)
Applies toIndividuals and trustsIndividuals and trusts
Lifetime giftsNo cap on value for full relief£2.5m allowance applies to lifetime gifts and on death
Refresh period (individuals)Not applicableEvery 7 years
Refresh period (trusts)Not applicableEvery 10 years
AIM and “not listed” shares100% BPR available50% relief only
Spouse/civil partner transferStandard IHT rulesUnused £2.5m allowance transferable
Instalment optionLimitedExtended to all APR/BPR property, interest free over 10 years

Impact on Business Property Relief planning

Trading Businesses and Family Companies

Business Property Relief will continue to apply to:

  • Sole traders and partnerships

  • Shares in unquoted trading companies

However, the cap means BPR can no longer be treated as a blanket solution. Valuations, ownership structures and timing now matter far more than they used to.

AIM Shares and EIS Holdings

A particularly important change is that shares in companies not listed on a recognised stock exchange, including:

  • AIM-listed companies

  • EIS shares quoted on AIM

will only qualify for 50% relief, regardless of value.

This is a significant departure from the current position and may affect investment and estate planning strategies that previously relied on full BPR.

Trusts and Business Property Relief 

Trusts will also be brought firmly into the new regime.

  • Trusts will have their own £2.5 million 100% relief allowance

  • This allowance will refresh every 10 years

  • Trust exit charges will be calculated on unrelieved values, creating greater certainty but potentially higher tax costs

For families using trusts as part of succession or asset protection planning, this is an area that should be reviewed sooner rather than later.

What business owners should be considering now

The changes do not mean BPR is no longer useful, far from it. But they do mean it needs to be used deliberately.

Key questions now include:

  • How much of your business would fall above the £2.5 million allowance?

  • Would your estate have the liquidity to fund any IHT due?

  • Should succession planning be accelerated, for example by introducing family members earlier?

  • Is lifetime gifting appropriate, bearing in mind the seven-year rule and retrospective application of the allowance?

  • What are the capital gains tax implications of any changes?

In some cases, life assurance written in trust may form part of the solution but only once the numbers are properly understood.

Understand how the new BPR rules affect your business 

These changes will not affect every business in the same way. Much depends on value, ownership structure and timing.

If you would like clarity on how the new BPR rules apply to your business, we can help you assess the position and consider practical next steps — before April 2026 reduces your options.

Get in touch to arrange a consultation. 

Review my BPR position

Other posts of interest

See more articles