Chancellor Increases Agricultural and Business Property Relief Allowance to £2.5 Million
Surprise amendment to IHT proposals
The government has announced a major change to the agricultural property relief (APR) and business property relief (BPR) reforms that will take effect from 6 April 2026.
The full 100% relief from inheritance tax will now apply to the first £2.5 million of qualifying assets, up from the previously announced £1 million.
This means that a couple can now pass on up to £5 million of agricultural or business assets between them tax-free, in addition to the standard inheritance tax allowances that apply.
The proposed reforms to inheritance tax on agricultural and business assets were first announced as part of the 2024 Autumn Budget, and this is now the second amendment to the original proposals. The first amendment was included in the 2025 Autumn Budget and the new allowance can now be transferred between spouses or civil partners.
HM Treasury has said that the increase in allowance will halve the number of estates that will be affected by the reforms, and that around 85% of estates will pay no more inheritance tax than they would have done without the reforms.
If you would like personalised advice on how these inheritance tax reforms and the new increase in allowances will affect your estate, please get in touch. We would be happy to help you!