Following sustained pressure from various lobbying groups, opposition MPs, farmers and business owners, on 23rd December 2025 the government announced changes to the proposed Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms that were originally announced in the Autumn Budget 2024.
APR and BPR are often highly valuable reliefs as they reduce the value of qualifying assets for Inheritance Tax purposes, thereby saving considerable sums for people in the right circumstances. While there have been calls from ministers to postpone the announced changes to APR and BPR, they are currently expected to come into force on 6 April 2026.
How did we get here?
On 23 December 2025, there was a significant amendment to the planned changes to the APR and BPR allowances and set out below is a timeline of the announcements made so far:
What does the most recent announcement mean for any gifts of APR and BPR assets already made?
Despite the positive uplift in the cap to £2.5m, this unexpected change has left many families questioning whether the estate planning they have already completed was, in fact, necessary. In readiness for the impending APR/BPR changes, many of our clients made gifts to younger generations to help reduce the value of their estates and ensure that their IHT liabilities were being managed.
Any lifetime gifts made will have been on an irrevocable basis. However, for many, this recent uplift in the cap to £2.5m has left them questioning whether such gifts could be reversed or, in fact, gifted back. Unfortunately, it is not possible to reverse an irrevocable gifts as the assets will now be legally the recipient’s property and form part of their estate for IHT. Furthermore, this may not be advantageous, tax wise.
It is important to note that commonly gifts between civil partners /spouses are not subject to IHT or Capital Gains Tax (CGT). In the circumstances where gifts were made to other family members, reversing this gift is not simple and below is an example to explain the issues.
Example
A farming family made gifts in 2025 to reduce their estate as their assets exceeded what would have qualified for 100% APR relief under the post-6 April 2026 changes. Mr A held £1.3m worth of APR qualifying land, which he purchased for £30,000 back in 1992.
In readiness for the APR changes, Mr A gifted £300,000 worth of the APR qualifying land (‘the Gift’) to his daughter. The Gift was classed as a ‘Potential Exempt Transfer’ for the purposes of Mr A’s estate. Therefore, at the date of the gift, Mr A was not subject to any immediate charge of IHT. . If Mr A were to die within 7 years of making the Gift, the value of the Gift would be brought back into account as part of his estate for IHT purposes.
As Mr A’s Gift qualified for APR when it was made and this meant that he could claim ‘holdover relief’ for CGT purposes on the gift made to his daughter. The claim of holdover relief meant that Mr A did not have to pay any CGT on the increase between the current value of that land compared to the share of the value when he first purchased it in 1992 (known as the ‘base cost’). However, the gain still remains but Mr A’s daughter is treated as having received the Gift at the share of value when Mr A first purchased the land in 1992.
In light of the announcement on 23 December 2025, Mr A now realises in hindsight that he would not have made the Gift as his estate would no longer be subject to IHT given the increase in the APR allowance to £2.5million. Mr A now wants to reverse the Gift to his daughter.
Mr A qualified for holdover relief on the basis that it qualified for APR as he had owned the land subject to the Gift for over 7 years and occupied it for the purposes of agriculture during that period. The daughter will not have held the land for long enough to qualify for APR and therefore would not be able to claim hold over relief on a gift back to Mr A. The main tax issues for the daughter would be as follows:
The above example is for illustrative purposes only and it is assumed that no other lifetime gifts had been made by any of the parties.
Ultimately, gifting assets back to from where they came is not as simple as it seems and for many may lead to unintended adverse tax consequences. It is therefore necessary to carefully plan gifts or other estate planning changes with clear focus on the future if circumstances do change unexpectedly. Our Private Client Team would be pleased to assist with this.
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