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The much-anticipated changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) for Inheritance Tax (IHT) took effect from 6 April 2026.
If you’re a business owner or own agricultural land, these reforms could have a significant impact on your financial plan and what you leave to the next generation. As such, you might be feeling uncertain and anxious about how to protect what you’ve worked so hard to build.
Keep reading to find out what the new rules could mean for you and discover five practical steps you can take now to manage your wealth as tax-efficiently as possible.
Agricultural and Business Property Reliefs now include a £2.5 million cap on 100% relief
Before 6 April 2026, qualifying business and agricultural assets could benefit from 100% relief from IHT regardless of their value. In other words, you could pass these assets on without your beneficiaries facing an IHT bill.
Under the new rules, only the first £2.5 million of APR- and BPR-qualifying assets (£5 million for a married couple or civil partners) will receive the 100% relief.
Any assets that exceed this threshold, including AIM shares, will attract just 50% relief. As the standard rate of IHT is 40%, this creates an effective 20% rate.
As a result of these changes, your estate might now have an IHT liability where none existed before, or your beneficiaries could face a higher bill. As such, careful planning is necessary to manage your tax position efficiently and ensure that the next generation receives as much of your business wealth as possible.
5 practical steps clients and prospects can take now to manage their wealth as tax-efficiently as possible
1. Get a clear picture of your finances
A financial planner can help you review your estate, including the value of your business, agricultural land, and any other property, investments, and savings you own.
Getting a clear picture of your finances will allow you to assess whether you’re likely to exceed the new £2.5 million APR and BPR cap and plan accordingly. For example, you might identify some assets that could be moved, gifted, or restructured more efficiently.
2. Update your will
Your will is an important estate planning document, as it sets out how you want to pass on your business and personal assets.
If you wrote your will before the change to APR and BPR, it may no longer be as tax-efficient or as practical as it was previously. Indeed, if it assumes you can pass on your business free from IHT, your loved ones could face unexpected tax bills, delays, or even disputes when it comes time to deal with your estate.
Reviewing and updating your will ensures that your succession plan aligns with your wishes, that your chosen beneficiaries inherit the assets you intend them to, and that available tax exemptions and reliefs are used effectively.
A financial planner can work alongside your solicitor to make sure that your will fits with your wider financial plan.
3. Consider lifetime gifting
If it looks like your IHT liability might increase following the reforms to BPR and APR, you may want to rethink your lifetime gifting strategy.
Making gifts during your lifetime could reduce the value of your estate over time, which may lower a future IHT bill for your family.
There are various annual gifting allowances and exemptions you could use to pass on wealth tax-efficiently. For example, the annual exemption allows you to gift up to £3,000 in the 2026/27 tax year without it being added to your estate for IHT purposes. Some larger gifts may be completely exempt from IHT if you survive for seven years after making them.
As such, gifting could be a useful way to pass on wealth gradually, while still retaining control of your business.
4. Review your business structure
How your business is structured can impact whether BPR is available and how much you can claim.
For example, if you’ve owned shares in a trading limited company for more than two years, they’ll usually qualify for 100% BPR up to the new capped amount. In contrast, personally owned assets that are used by your business may only qualify for 50% BPR, while relief is not available at all for investment businesses, such as property letting.
In other words, your business may be treated differently for tax purposes depending on how it’s structured and where the assets sit.
As such, reviewing how your business is owned and managed could help you understand whether the current set-up makes the most of BPR. If what worked well before the rule changes is no longer as effective, a restructure, reorganisation, or different ownership arrangement might improve the IHT outcome for the next generation.
5. Seek financial advice
A financial planner can help you understand how the changes to BPR and APR apply to you and your business.
They can review your existing estate and succession plans and help you make adjustments to ensure your wealth is passed on as tax-efficiently as possible.
At Sovereign, we specialise in supporting business owners with all their financial planning needs. If you’d like to learn more about the personalised support and advice we offer, please get in touch.
Email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.
Approved by Best Practice IFA Group Ltd on 21/5/2026