Major reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) were announced in the Autumn 2024 Budget and further revised on 23 December 2025. These changes took effect on 6 April 2026, marking a significant shift in the inheritance tax landscape. These reforms introduce, for the first time, a £2.5 million cap on the amount of qualifying assets that can benefit from 100% APR or BPR per individual. Previously, APR and BPR operated as unlimited reliefs, meaning many farming families and business owners were protected from Inheritance Tax (IHT).
What are APR and BPR?
APR and BPR are IHT reliefs applied and claimed on qualifying agricultural and business assets when calculating the IHT due on an estate. Prior to 6 April 2026, these reliefs were available at 100% or 50%, with no upper limit on the value of assets that could qualify. From 6 April 2026, the position changed meaning that £2.5 million of qualifying APR/BPR assets per individual receives 100% relief but notably any qualifying value above £2.5 million receives 50% relief, creating an effective 20% IHT charge on the excess.
Unused APR/BPR allowance can be transferred between spouses or civil partners. This means a couple could potentially have up to £5 million of qualifying assets at 100% relief.
Paying IHT in Instalments
As more estates become subject to IHT due to the new cap, the government has extended the option to pay IHT on APR/BPR assets in 10 annual interest free instalments. This is particularly valuable for farming families and business owners who may inherit APR/BPR assets and wish to retain them rather than sell to meet an immediate IHT liability.
Impact on lifetime gifting and Trusts
The changes affect not only death estates but also trusts and lifetime gifting strategies.
Trusts that were in existence before 30 October 2024 and that held APR or BPR qualifying assets will each benefit from their own £2.5 million allowance. As this is no longer the case for new trusts, careful consideration will need to be exercised before winding up any pre-30 October 2024 settlements.
Moving forward, trusts that were set up on or after 30 October 2024 will have the benefit of the settlor’s lifetime allowance of £2.5 million between them. This allowance will be chronologically allocated with consideration to the value of relievable assets at the time of entering the trust. The value of the available allowance is set at the lower of either £2.5 million or the value of the qualifying assets as at the date they were settled.
Exit Charges Standardised
From 6 April 2026, all exit charges (before or after the first 10 year anniversary) are calculated using unrelieved values, meaning that APR and BPR are not taken into account for this calculation. This is particularly important for trustees who previously relied on the relief(s) to reduce periodic or exit charges.
How does this affect you?
Whether you own farmland, run a business, act as a trustee or are a beneficiary of a trust holding APR/BPR qualifying assets, these changes directly affect you. It is important to regularly review your Wills, estate and trust planning and potential lifetime gifts.
Our expert Private Client team advises landowners, farming families, and business owners on estate planning across generations. If you would like to discuss how these changes affect you or your family, please contact a member of our Private Client team.
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