Read more articles in: Blog, Emma Sommerville, Private Client

Inheritance Tax reliefs are changing from April 2026 – is your estate protected?

The 2024 Autumn Budget brought unwelcome news for many working families through changes to Agricultural Property Relief (APR) and Business Property Relief (BPR).

These rules, due to take effect in April 2026, have the potential to create significant tax liabilities, particularly where farms or businesses have been passed through the family.

Farmers and business owners are among those most at risk, making a review of existing estate planning essential.

What are the upcoming changes?

In 2024’s Autumn Budget, the Government revealed that from 6 April 2026 estates will only receive 100 per cent Inheritance Tax (IHT) relief on the first £1 million of combined business and farming assets.

Anything above this threshold will receive a 50 per cent relief, creating a 20 per cent IHT charge on these assets.

However, in the Chancellor’s 2025 Autumn Budget announcements, she confirmed that if any of the £1 million allowance goes unused in a person’s estate, it will be transferred to their spouse or civil partner.

This will provide up to £2 million of qualifying assets to pass on tax-free on second death.

While the introduction of transferable relief is a welcome development for married couples and civil partners, it does not extend to cohabiting partners who have not formalised their relationship, leaving many still unable to access these tax benefits.

This highlights an ongoing gap in UK tax and estate law, where the system still incentivises formal relationships and leaves cohabitants at a disadvantage despite societal shifts toward non-marital partnerships.

How may these changes affect you?

There is now only a short window for individuals to review their Wills or consider whether lifetime gifts might be suitable.

The absence of further protections leaves those relying on a simple transfer of assets on death exposed to unexpected tax bills.

Families facing incapacity issues or relying on outdated Wills may also struggle to make the necessary changes before April 2026.

Have you updated your estate plan?

Future asset protection will likely involve careful planning to optimise nil-rate band allowances and possibly an increase in lifetime gifts to transfer assets IHT-free.

The sooner you act, the higher your chances of being able to protect your assets and pass them on to the next generation free of IHT tax liabilities.

A few steps to consider include:

Updating your Will so it is structured to maximise available allowances
Reviewing ownership of any business or agricultural assets
Considering lifetime gifts where appropriate, bearing in mind the seven-year rule for IHT
Assessing whether APR or BPR-qualifying assets can be transferred during your lifetime without triggering an immediate IHT charge before April 2026

Contact our solicitors to review your Wills and estate plans so we can advise the best course of action.

Do you want to know if the new APR and BPR changes affect your estate? Speak to our team today.