On 6 April 2026, the government’s changes to the Agricultural Property Relief (APR) and Business Property Relief (BPR) took effect.
Initial plans were altered in favour of beneficiaries, with the Inheritance Tax (IHT)-free allowance increased from an initially planned £1 million to £2.5 million.
Any unused IHT-free allowance is also now capable of transfer between spouses and civil partners. This follows robust lobbying and protests.
How much is Agricultural Property Relief and Business Property Relief?
Before 6 April 2026, agricultural property and business property assets that qualified for relief were entitled to this at 100%.
As of 6 April 2026, there is a cap of £2.5 million per person. If an individual’s estate does not use the whole £2.5 million after their death, then any remaining allowance can be transferred to their spouse or civil partner’s estate when the time comes, giving a potential total allowance of £5 million.
It is also the case that if a lifetime gift of qualifying property is made and the donor survives for seven years after making the gift, the allowance refreshes.
The allowance is to be index-linked to the Consumer Prices Index (CPI) as of 6 April 2031.
In addition, everyone has an IHT allowance of £325,000, known as the nil-rate band. Again, this is transferrable between spouses and civil partners. Combined with the other relief, this makes a potential total allowance of £5.65 million for a married couple or civil partners.
IHT is payable on agricultural and business property above the allowance at a rate of 20%, which is half of the standard IHT rate of 40%. Payment can be made in interest-free instalments over a period of ten years, where necessary.
Allowances for trusts
The changes also apply to qualifying trusts, with a trust allowed a £2.5 million APR and BPR allowance.
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