Tips for protecting your family business or farm: get ready for April 2026
What is changing in 2026 for Business Property Relief (BPR) and Agricultural Property Relief (APR)?
Historically the reliefs have been utilised by family business owners, farm owners and those invested in the AIM market as a means of passing down wealth to the next generation free from Inheritance Tax (IHT). In many cases the reliefs allowed businesses and farms to continue operating after death without facing an inheritance tax bill which could prove catastrophic for any trading entity.
Changes to the BPR/APR regime were first announced in the Autumn Budget 2024, which following consultation were amended in December 2025. From April 2026, the changes are as follows:
- Individuals will have a single £2.5m allowance across qualifying APR and BPR assets.
- Any qualifying value above £2.5m will receive a 50% relief from IHT (i.e. an IHT rate of 20% instead of 40%).
- Unused allowances can be transferred between spouses – giving married couples or civil partners £5m of allowance in total.
- AIM shares will not qualify for the allowance, but will attract a 50% relief from IHT (i.e. an IHT rate of 20% instead of 40%).
How it will work: a case study
Mr & Mrs Samuels have an estate worth £10m, made up of their main residence, some cash investments, and a 50% share each in a manufacturing business which they have jointly run for 25 years.
| Asset | Value |
|---|---|
| Property (joint tenants) | £1,000,000 |
| Bank account / ISAs / investments | £1,000,000 |
| Family business (trading) | £8,000,000 |
| Total | £10,000,000 |
If Mr & Mrs Samuels have simple Wills leaving everything to each other on first death, there will be no inheritance tax to pay thanks to the spousal exemption. On second death, based on the figures above, the IHT liability will be as follows (assuming that all Nil Rate Bands are available).
| Current rules | Post April 2026 rules | |
|---|---|---|
| Net estate value | £10,000,000 | £10,000,000 |
| Less Nil Rate Band | -£325,000 | -£325,000 |
| Less Nil Rate Band (Transferrable) | -£325,000 | -£325,000 |
| Less BPR relief | -£8,000,000 | -£2,500,000 |
| Less BPR relief (Transferable) | -£2,500,000 | |
| Taxable Estate | £1,350,000 | £4,350,000 |
| IHT @ 40% | £540,000 | |
| IHT @ 40% on non-BPR assets | £540,000 | |
| IHT @ 20% on BPR assets (£3m) | £600,000 | |
| Total IHT | £540,000 | £1,140,000 |
After April 2026, Mr & Mrs Samuels’ IHT liability will increase by £600,000 (from £540,000 to £1.14m). It is possible that their personal cash reserves will be sufficient to cover this, but more likely that some assets would need to be sold, which could affect the viability of the business.
What should I be doing before April 2026?
For anyone that has a qualifying business or farm approaching £2.5m in value, or has aspirations for this in the future, we are in a critical window for estate planning, which could have a positive impact on the amount of inheritance tax paid on death. Some of the options that you should be considering, are:
- Transfer to children/individuals: Whilst transfers to individuals could still be effective post April 2026, any gifts to individuals need to be made at least seven years before death to be fully effective. Input will be required from Corporate lawyers to ensure that the transfer is successful. They may also offer some options for retaining voting control in the company via creation of share classes. Very careful planning is required as there could be consequences for your company in giving shares away.
- Transfer to a lifetime trust: Transfers of BPR/APR qualifying assets into a trust are unlimited until April 2026, with no immediate IHT charge. After April 2026 transfer of BPR/APR assets into trust, without an entry charge, will be limited. Advice should be sought to ensure that you understand the full extent of how your trust will be taxed long term.
- Review your Will: Wills for business/farm owners need to be reviewed in light of the changes. It is possible that you might choose to leave a share of the family business to children on first death so that any growth in capital value falls out of the IHT picture. You might also consider capturing the BPR allowance of the first to die to protect against the sale of a company between first and second death. If a previous Will has been drafted with BPR/APR in mind, it must be reviewed as soon as possible.
- Transfers between spouses – If all of the company is owned by one spouse you could consider splitting the ownership to make use of both allowances.
- Valuations – Obtain professional valuations in case they are required for future calculations of tax liabilities, and to better understand your current exposure.
- Review trusts – Current trusts containing company shares or farming assets need to be reviewed as soon as possible, as they could now become liable to the 10 year Anniversary Charge after April 2026.
What if I miss the deadline?
If you miss the deadline, there are still plenty of options available to you. You will still need to review your Will and trusts, and you can still make effective tax planning decisions which may reduce your overall IHT exposure. There are several other IHT planning options to consider, outside of BPR and APR. It should also be noted that it will still be possible to pass your business down to the next generation, which could reduce your IHT exposure.
Daniel Church is a Partner in the Succession & Tax team at Blake Morgan. If you require any support relating to your Will and estate planning, please contact Daniel.
Tax planning is complicated. The content of this article is provided as a general guide and should not be relied upon for your personal tax planning. You should always take advice on your individual circumstances.
Share:
If you need advice on succession and tax issues
Speak to a member of our Private Client team
Arrange a callHOW CAN WE HELP?
To get in touch with one of our legal experts please fill in your details.
