Prepare for major changes to Agricultural and Business Property Relief
The recent Budget introduced updates to Agricultural Property Relief (APR) and Business Property Relief (BPR) under Inheritance Tax (IHT).
Aimed at balancing support for family businesses with increased contributions from wealthier estates, these changes will take effect from April 2026.
Planning ahead is essential to safeguard your legacy and minimise tax liabilities.
Relief Caps for APR and BPR
From April 2026, the full 100 per cent relief on agricultural and business assets will be capped at £1 million. Any value above this threshold will qualify for just 50 per cent relief.
While £1 million may seem substantial, high-value assets such as farmland, buildings, and machinery can quickly exceed this limit, leaving families with larger operations exposed to higher tax bills.
For investors in AIM-listed shares, the changes are even more impactful. Relief on shares not listed on recognised stock exchanges will drop to 50 per cent across the board.
This shift could affect those using AIM shares for estate planning.
What can you do?
- Review asset structures – Reassess how agricultural or business assets are held to optimise tax efficiency.
- Revisit your portfolio – For AIM shares, consider diversifying into other tax-efficient investments, such as Enterprise Investment Schemes or gifting shares to family members.
- Explore trusts – Trusts can be a useful tool to reduce the taxable value of your estate while ensuring assets remain within the family.
Instalment payments for other assets
To ease financial pressures, IHT on non-APR or BPR assets will be payable in 10 equal instalments starting April 2026.
While this spreads the cost, estates lacking liquidity may still struggle to make payments.
For property-rich but cash-poor estates, liquidity planning is key.
A well-balanced estate with assets that can be easily converted to cash can help ensure instalment payments are manageable without forcing the sale of key assets.
Boost for sustainable farming
From April 2025, agricultural relief will expand to include land managed under environmental agreements, such as rewilding or biodiversity initiatives.
If your farming operations aren’t yet involved in these schemes, it may be worth exploring whether transitioning to environmentally friendly practices could deliver both tax advantages and environmental benefits.
Contact us today to discuss strategies that align with your assets and ambitions. Planning now will help ensure your estate is well-positioned for these upcoming changes.