For years, families have used Business Property Relief (BPR) and Agricultural Property Relief (APR) to pass on trading businesses and farms without a large Inheritance Tax (IHT) bill.
From 6 April 2026, those reliefs change in a way that will matter a lot if you have a valuable business, a farm, or you’ve been relying on assets that qualify for these reliefs as part of your estate plan.
What are BPR and APR?
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BPR can reduce (or remove) IHT on qualifying trading business interests (for example, shares in a private trading company), usually after two years of ownership, assuming the business meets the “trading not investment” rules. (We cover the basics here: “What is Business Property Relief?”)
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APR can reduce (or remove) IHT on qualifying agricultural property used for agricultural purposes, subject to conditions.
Historically, many people thought of these reliefs as “effectively uncapped” for genuine farms and trading businesses. That’s the bit that’s changing.
The key change from 6 April 2026
The new “100% relief allowance” is capped. From 6 April 2026, 100% relief for the combined APR + BPR will apply only up to £2.5 million per person. Above £2.5m, the relief drops to 50% Any qualifying APR/BPR assets above the £2.5m allowance are expected to receive 50% relief (so half of that value counts towards the estate for IHT).
What does that mean in practice?
If your estate pays IHT at 40%, then 50% relief reduces the effective IHT rate to up to 20% on the portion above the allowance. The government has said that spouses/civil partners can effectively pass on up to £5m of qualifying agricultural/business assets between them before the 50% rate applies (on top of existing IHT allowances).
This cap was originally framed as £1m, but the government announced an increase to £2.5m on 23 December 2025.
Government material also indicates that where IHT is due on affected qualifying assets, it can be paid in equal instalments over 10 years (with the government describing this as interest-free in its public explainer).
Who should care (and who probably doesn’t need to panic)
You should pay attention if…
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Your farm/business value (that would qualify for APR/BPR) is anywhere near or above £2.5m (or £5m for a couple).
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You’ve assumed “the business/farm is IHT-free” and haven’t built a liquidity plan.
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You hold assets you believe qualify, but you haven’t pressure-tested the eligibility rules (for example, trading vs investment tests, surplus cash, asset use, ownership periods).
You may be largely unaffected if…
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Your qualifying APR/BPR assets sit comfortably below the allowance and you’re not relying on “borderline” eligibility.
The government’s own impact commentary suggests many estates claiming BPR may not pay more as a result of the changes — but the estates that do get caught can be hit with a significant new bill, and it’s often a cashflow problem as much as a tax problem.
Three examples
A: Trading company worth £4m (qualifying for BPR)
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First £2.5m at 100% relief
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Remaining £1.5m at 50% relief → £750k becomes chargeable
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IHT at 40% on £750k → £300k IHT (effective ~20% on the excess)
B: Farm/business assets for a couple worth £6m (qualifying)
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Potential combined 100% relief allowance up to £5m
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Excess £1m at 50% relief → £500k chargeable
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IHT at 40% on £500k → £200k IHT
C: “It should qualify”… but the business has built up large cash/investments
Even before April 2026, holding substantial surplus cash/investments can create BPR risk if HMRC view the business as mainly “investment” rather than “trading”. If that risk exists and you haven’t addressed it, the April 2026 change is the second problem; the first is that relief may be weaker than you think.
What to do before 6 April 2026
If you do nothing else, do these five things.
1) Get clear on what actually qualifies
List the assets you believe qualify for APR/BPR and note:
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Who owns them
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Approximate values
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Whether there are any “grey areas” (surplus cash, asset use, trading vs investment)
2) Run the allowance maths (and don’t forget couples planning)
Work out:
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Your estimated value of qualifying assets vs the £2.5m allowance (and £5m for couples, where relevant).
3) Build a liquidity plan
If an IHT bill could arise, ask:
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Where does the cash come from without forcing a distressed sale or harming the business?
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If instalments apply, can the estate/serviceability actually cope?
4) Check your wills, shareholder/partnership agreements, and succession plan
Tax is only one piece. The bigger question is:
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Who should own/control the business or farm next?
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Is that what your current will/agreements actually deliver?
5) Pressure-test the “Plan B”
Even a good plan breaks if:
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The business value changes
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The relief doesn’t apply as expected
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A death happens at the wrong time (before ownership periods are met, or mid-transition)
Next steps (if you want this turned into a plan)
If you own a business, a farm, or you expect to rely on APR/BPR as part of your estate planning, the best move now is a short “fact-find and stress test”:
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confirm eligibility assumptions
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establish values and ownership
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quantify the potential exposure from 6 April 2026
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create a liquidity + succession plan that still works if circumstances change
If you need advice, we’re here to help. Schedule a free, no-obligation chat here. A guide on selecting a financial advisor is also available here.
This article is general information, not personal advice. Tax rules can change and relief eligibility depends on specific facts. If you want help modelling this for your situation, we can do that as part of a structured estate planning review.
