On 23 December, the Government announced revisions to its proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR). After strong feedback from farmers, business owners and advisers, the original plans have been softened, but the direction of travel remains clear. These reliefs are changing, and many clients will need to revisit their inheritance tax planning.

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What was proposed
APR and BPR have long allowed qualifying agricultural and business assets to pass free of inheritance tax, often at 100 percent relief and with no upper limit on value.
Earlier proposals aimed to restrict this by introducing a cap of £1m for each individual on full relief and applying a reduced level of relief above that threshold. While designed to raise revenue, the changes caused concern for family farms and trading businesses with high-value assets but limited cash flow.

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What changed on 23 December
The Government has now confirmed a more generous approach than first announced.

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The allowance for full relief has increased
Instead of a £1 million cap, individuals will now be able to claim 100 percent APR and BPR on up to £2.5 million of qualifying assets. For many estates, this change alone will remove any immediate inheritance tax exposure.
For married couples and civil partners, the position is even stronger. Any unused allowance can be transferred, potentially allowing up to £5 million of qualifying assets to pass with full relief.

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Reduced relief still applies above the threshold
Where qualifying assets exceed £2.5 million, relief will be limited to 50 percent on the excess. This effectively results in an inheritance tax charge at 20 percent on higher-value estates.
Large farms, substantial business interests and owners of valuable unlisted shares are most likely to be affected by this restriction.

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Shares and trusts remain in focus
The Government has confirmed that shares in unlisted companies, including AIM-listed shares, will generally qualify only for the reduced rate of relief. This remains one of the more significant changes and may affect long-standing inheritance tax strategies.
Trusts will also fall within the new rules, with the outcome depending on the type of trust and when assets were settled. Careful review will be essential where trusts form part of an estate plan.

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What clients should be doing now
These changes are better than originally expected, but they still represent a tightening of the inheritance tax regime.
Clients should review wills and succession plans to ensure the increased allowance is fully used. Couples should check asset ownership and business structures to maximise transferable relief. Up-to-date valuations will be crucial, particularly where estates sit close to the new thresholds. Those relying on BPR for share portfolios or business interests should reassess their exposure under the reduced relief rules.

Clients should continue to review their qualification of such reliefs, whilst the increased threshold is a relief, the scrutiny of what qualifies for such relief is likely to increase, as such, land not used for agricultural purposes; for example with holiday lets, and businesses holding assets considered to be an investment, are likely to continue to see restrictions to the relief. As such careful tax planning and potentially restructuring may need to be considered.

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Looking ahead
The revised APR and BPR rules are expected to take effect from 6 April 2026 through the next Finance Bill. While the Government has eased the impact, unlimited relief is coming to an end.
Early planning and clear advice will be key to protecting family wealth and avoiding unexpected inheritance tax liabilities.
If you would like to understand how these changes affect your estate or business, please get in touch with our tax team.