This is a reminder that changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) came into effect from 6 April 2026, restricting the availability of 100% relief for qualifying agricultural and business assets.
Under the new rules, 100% relief is available on the first £2.5 million of combined qualifying agricultural and business property in an estate. Any qualifying assets above this allowance will receive relief at 50%, resulting in an effective Inheritance Tax rate of up to 20%, rather than the standard 40%.
The £2.5 million allowance is available to each individual and can be transferred to a surviving spouse or civil partner if it has not been fully used. This means that spouses or civil partners will be able to pass on up to £5 million of qualifying agricultural and business assets between them free of Inheritance Tax.
These allowances are available in addition to the existing Inheritance Tax nil-rate bands and other applicable exemptions.
The changes also extend the option to pay Inheritance Tax by equal annual instalments over 10 years, interest-free, to all property qualifying for APR or BPR.
The new rules apply to deaths on or after 6 April 2026, subject to transitional provisions for certain chargeable lifetime gifts and trusts. Where a first spouse or civil partner died before 6 April 2026, it will be assumed they had a full £2.5 million allowance to transfer on the death of the surviving spouse or civil partner on or after 6 April 2026.