Government U-turn on inheritance tax: what does it mean for you?

After widespread concern about the impact of IHT on family-run enterprises, the UK government has announced a change of direction on the relief cap for Agricultural Property Relief (APR) and Business Property Relief (BPR) that will be particularly relevant to farmers and business owners.

What has changed?

The government has increased the cap on 100% inheritance tax relief available on qualifying agricultural and business assets.
From 6 April 2026, the amount of qualifying assets that can benefit from 100% APR or BPR will rise from the previously proposed £1 million to £2.5 million per individual.
This means more people will be able to pass on qualifying business and agricultural assets with no inheritance tax to pay, or reduce the amount of tax due where asset values exceed the relief cap.

Why has this happened?

The change follows growing pressure from farming bodies, business groups and professional advisers who highlighted concerns that rising land and property values would push estates over the IHT threshold, while income and cash flow would stay relatively modest.
For farmers and business owners, this raised the risk of heirs having to sell land, property or parts of a business, just to fund an inheritance tax bill.

What does this mean for farmers and business owners?

In the short term, the higher threshold provides some reassurance. It may reduce immediate pressure on succession plans and give families more flexibility when thinking about passing on land, property or business assets.
However, timing remains important. The revised rules are due to take effect from 6 April 2026, and succession and estate planning can take time, particularly where land, business interests or multiple family members are involved. Early planning can help ensure the available reliefs are used effectively.

Why inheritance tax may still be an issue

Even with the new higher threshold, many estates could still exceed the IHT limit due to:

• Rising property and land values
• Business assets and investments that do not qualify for full relief
• Pension pots that form part of the estate
• Insurance policies or other assets that are not structured efficiently

As a result, inheritance tax exposure can still arise gradually, often without people realising until it is too late.

Next steps

• Review the value of your estate, including land, property, business assets, investments and pension pots

• Review your will and succession plans to ensure they remain aligned with your wishes and current legislation

We’re here to help

Putting plans in place early can make a meaningful difference to the long-term future of your family, farm or business. Taking advice early may help you understand how current reliefs apply to your circumstances and avoid unnecessary complications in the future. Please contact us to review your inheritance tax and succession planning.