Big changes to BPR and APR from April 2026: Why you need to act now

The Government has announced sweeping reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR), due to take effect on 6 April 2026. For decades, these reliefs have allowed many family business owners and farmers to pass assets down through the generations with little or no Inheritance Tax (IHT) to pay. That landscape is about to shift, and with only a few months until the new rules apply, now is the time to understand what they mean for you.

Under the current system, qualifying business and agricultural property can receive 100% relief from IHT, regardless of value. From April 2026, however, this will change. Each individual will be entitled to a maximum of £1 million of business and agricultural assets that qualify for full 100% relief. Any value above that level will receive only 50% relief, meaning that half of the excess will be subject to the standard 40% IHT charge.

There is another crucial detail: the new £1 million allowance cannot be transferred between spouses or civil partners. Unlike the existing nil-rate band – which allows a surviving spouse to use any unused allowance from their partner – the new BPR/APR cap is strictly personal. If one spouse passes away without using their full £1 million allowance, it cannot be transferred to the survivor.

Trust structures are also affected. Trusts set up before 30 October 2024 that hold qualifying business or agricultural property will each retain their own £1 million allowance under the new rules. But for any new trusts created after that date, the various trusts set up by the same person will have to share a single £1 million allowance. This closes down a route that some families have historically used to reduce tax exposure by creating multiple trusts.

Finally, the rules for AIM-listed and certain other unlisted shares are tightening. At present, these shares can qualify for 100% BPR if held for at least two years. From April 2026, they will only qualify for 50% relief, which means a far greater portion of their value could be exposed to IHT.

The impact of these changes will be wide-reaching. Government estimates suggest thousands more estates will become liable for inheritance tax each year. Business owners who expected their entire companies to pass tax-free to the next generation may now find that a substantial part of their estate is taxable. For farming families, where land values are high but cash flow is often tight, this could create significant financial pressure. Trustees holding business or farm assets may also face periodic tax charges that previously did not apply.

The key message is clear: there are only a few months left before these reforms take effect, and they could profoundly alter the tax position of your family or business. While BPR and APR will still provide valuable relief, the introduction of the cap, the restriction on spousal transfer, and the changes to AIM shares mean the rules are no longer as generous or straightforward as before.

Every family’s circumstances are unique, and the right response will depend on your business structure, your estate, and your future plans. That’s why it is vital to start the conversation now rather than waiting until the deadline is upon us.

At Moore South, we are working closely with business owners, farmers, landowners and trustees to assess the potential impact of these changes and to explore the best way forward. If you think your estate could be affected by the April 2026 reforms, we encourage you to contact us as soon as possible to review your options and protect the legacy you have built.

UPDATE

he Government has today announced a significant change to the UK inheritance tax (IHT) regime, following sustained pressure from farming bodies and business groups. The update centres on Agricultural Property Relief (APR) and Business Property Relief (BPR) and represents a notable softening of reforms proposed in the 2024 Budget.

What has changed?

The key announcement is an increase in the value of assets that can qualify for full inheritance tax relief:

• The APR and BPR threshold has increased from £1 million to £2.5 million per estate
• Where relief is transferred between spouses or civil partners, this effectively allows up to £5 million of qualifying assets to pass free of inheritance tax
• Assets above the £2.5 million threshold will still qualify for relief, but at a reduced rate, rather than being fully exempt

This marks a substantial shift from earlier proposals, which would have exposed many family farms and privately owned businesses to unexpected inheritance tax liabilities.

Speak to our tax team