From 6th April 2026, Inheritance Tax undergoes one of its biggest changes to date, as HMRC have introduced a cap on 100% relief at £2.5m, with a default rate of 50% onwards.
What is BPR and APR?
Business Property Relief (BPR) and Agricultural Property Relief (APR) reduce the value of qualifying assets when calculating the Inheritance Tax (IHT) arising on either certain lifetime transfers or on death.
The reliefs are available at either 100% or 50% and prior to the new announcements there was no limit on the value that could qualify for 100% relief. APR and BPR are valuable reliefs that help to reduce the charge to IHT when passing on family farms and other businesses, in some cases eliminating the charge entirely.
What BPR and APR changes were announced during the 2025 Autumn Budget?
From 6th April 2026, there will be a restriction placed on the value of assets which qualify for 100% relief at £2.5m, as 50% relief is set to become the default rate. While the 100% relief limit was initially set to be £1m, with the allowance not being transferable between spouses or civil partners, the government announced in December 2025 that this would be increased to £2.5m and become transferable between spouses and civil partners following public pressure, in particular from the farming community.
Who will be affected by the BPR and APR changes in April 2026?
The changes will primarily impact business owners and farmers and could lead to large IHT liabilities where under the previous rules, no IHT charge would have arisen. Whilst it will be possible to pay the IHT arising over a 10-year period in interest-free instalments, the question of funding the IHT liability remains.
The changes to the rules will also impact on IHT liabilities should gifts of qualifying property be made to discretionary trusts, with such trusts containing qualifying property prior to 30 October 2024 gradually being brought within the new regime.
Broadly, discretionary trusts established before 30 October 2024 and containing qualifying property as of that date, will benefit from their own £2.5m 100% allowance. However, for discretionary trusts established on or after that date, they will essentially share the settlor’s £2.5m 100% allowance. This is a complex area, and trustees will need to carefully plan for ten-year anniversaries and distributions from trusts.
Want to find out more about the changes made to BPR/APR from April 2026?
Watch the recording of our Advisory Hour webinar on the BPR and APR changes here to explore April’s reforms in more depth or feel free to contact us to arrange a meeting to discuss your situation.
Advisory Hour is our webinar series for business professionals in the UK, offering free monthly webinars on timely insights, expert guidance and legislative updates. For a list of our upcoming webinars, visit the Advisory Hour page.
