21.11.25

Days to Go: How the Autumn 2025 Budget Could Accelerate Inheritance Tax Reform

For landowners, family-business owners, Trustees and those planning estates, major reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) are already legislated to take effect from 6 April 2026. These reforms will alter how much relief is available, impose caps, change eligibility in certain cases and introduce fresh Trust and lifetime-gift considerations.

The real urgency lies in what may come even sooner. With the Autumn 2025 Budget due on 26 November, many anticipate further restrictions that could accelerate or tighten these changes sooner than planned.

With increasing political pressure to raise tax revenues and limit the perceived generosity of business and agricultural reliefs, further IHT changes may be just weeks away.

Below we explain what is changing, who will be affected and what planning steps you should be considering now.

What is Business Relief (BPR) and Agricultural Property Relief (APR) – current rules?

BPR can reduce the value of certain business assets when calculating Inheritance Tax (IHT). This meant you may be able to pass on part, or even all, of your business without paying IHT on it.

Depending on the type of asset, you could get either 100% or 50% relief.

• 100% Business Relief was available for:

o A business or an interest in a business you owned.
o Shares in a company that’s not listed on the stock exchange (also known as an unlisted company).

• 50% Business Relief applied to:

o Shares in a listed company where you control more than 50% of the voting rights.
o Land, buildings or machinery that:
o You owned and used in a business you ran or controlled, or
o You let a business use, where the business is held in a trust that benefits your estate.

APR allows agricultural land, pastures, buildings for farming and certain farmhouses or cottages (if integral) to benefit from relief from IHT when transferred on death or in certain lifetime transfers. Relief is either at provides 100% or 50% depending on how the property is used or let.

Trusts also benefit from existing regimes for IHT relief, with no cap on qualifying assets.

What’s Changing in April 2026?

As part of the Autumn 2024 Budget, legislation is in place to significantly alter how APR and BPR work from 6 April 2026. Further clarification is likely to be introduced in the upcoming Budget, in particular in relation to the transitional rules for the period between 30 October 2024 and 5 April 2026.

– A new £1 million cap will limit full (100%) relief. The first £1,000,000 of qualifying property will continue to attract 100% relief, but anything above that will receive only 50% relief. For estates with significant agricultural or business assets, this represents a substantial shift.

– Shares in certain markets – such as AIM – will no longer qualify for 100% relief. Even where they previously met the criteria, they will generally only attract 50% relief.

– Trusts face particularly notable changes. A new trust relief allowance of £1 million will apply, refreshing every 10 years. However, the calculation of exit and periodic charges will increasingly be based on values before APR or BPR relief is applied, which could significantly increase liabilities.

– Lifetime gifts are also impacted. Gifts of qualifying property made after 30 October 2024 will fall under the new regime if the donor dies on or after 6 April 2026 within seven years of the gift. For individuals, the £1 million full relief allowance will refresh every seven years when assessing lifetime transfers.

– Importantly, unused relief allowances cannot be transferred between spouses or civil partners. Unlike the nil-rate band, the £1m limit is personal. Finally, to assist with liquidity, qualifying IHT liabilities on agricultural or business property can now be spread across ten equal annual instalments, interest-free. While this eases the immediate financial burden, it does not reduce the overall liability.

Who will be affected, and how?

The changes will affect estates differently. Smaller farms and businesses may remain under the £1 million cap, and therefore largely unaffected. However, for larger estates or those with diversified holdings, the effect could be significant.

Those wishing to pass on wealth via Trusts will also be affected. Trusts holding substantial business or agricultural property are particularly exposed, since exit charges will often be based on gross values, not net of relief. Business owners who hold AIM-listed shares will also lose the benefit of full relief.

Even individuals who have already made gifts since 30 October 2024 could be caught by the transitional rules if they pass away after 6 April 2026 and within seven years of making the gift.

HMRC estimates suggest that roughly 2,000 estates annually will face higher Inheritance Tax bills as a result of these reforms, with farming families making up a substantial proportion of those affected.

Implications for estate and Trust planning

The practical implications of these reforms are wide-ranging. Wills and ownership structures should be revisited to ensure that the £1 million allowance is not wasted, for instance by leaving property in a way that prevents relief from being claimed efficiently. Any unused relief cannot be passed onto a surviving spouse, it would be lost.

Trust deeds also warrant close scrutiny. Provisions governing capital appointments and exits need to be examined to ensure they align with the new trust allowance and the altered calculation of periodic charges. Trustees may wish to consider whether settling property before April 2026 offers advantages.

For those contemplating lifetime gifts, the transitional period creates a delicate balance. Transferring assets before the rules fully apply may preserve greater relief, but the seven-year survivorship rule continues to play a key role.

Valuation of assets also becomes more critical. Properties must clearly meet qualifying criteria – such as being actively farmed or correctly let and strong consideration needs to be given to the ownerships criteria – since any disqualification now has greater tax consequences.

Liquidity is another crucial area. Estates likely to face increased IHT should consider whether there are sufficient liquid resources to meet the liability. While the instalment option provides breathing room, families may still need to plan for insurance, asset sales, or restructuring. This instalment option also comes at the cost of interest charges on the delayed payment of the IHT.

Finally, the timing of gifts and settlements gains new importance. For individuals, the £1 million allowance refreshes every seven years, and for Trusts, every ten. From 2030, the allowance is expected to be index-linked, making it essential to plan with future adjustments in mind.

What you should be doing now

Trusts, gifting strategies, and business succession plans can still take advantage of both unlimited 100% BPR/APR but only for a limited time. With April 2026 on the horizon, there remains time to take action, but delay may narrow your options.

The first step is to map your assets—understand exactly what you own that qualifies for APR or BPR and its likely valuation.

Next, forecast your IHT exposure both under current rules and under the new regime. This will help to identify whether your estate is at risk of breaching the £1m cap and by how much.

Third, consider whether gifts or trust settlements made before the effective date would be advantageous. For some, early action will be key to preserving full relief.

Fourth, review Wills, Trusts and ownership structures. Subtle changes in how property is held, for example between spouses, in partnerships, or via Trusts, can make a material difference.

Fifth, ensure liquidity planning is in place. For estates with significant illiquid property, such as farmland or family businesses, options like insurance policies or structured sales should be considered well in advance.

How we can help

The forthcoming reforms to APR and BPR mark a turning point for Inheritance Tax planning in the UK. They introduce limits where previously there were none, they alter how Trusts and gifts are treated, and they demand more careful structuring of estates.

As we have explored above, the interaction of agricultural, business, Trust and Inheritance Tax rules is complex, and mistakes can be costly. A professional adviser can help you navigate the transitional period and build a strategy that safeguards both the family estate and the business itself.

At Renaissance Trust, our message to clients is ‘the earlier you act, the more options you preserve’. If you are concerned about how these changes may affect your estate or Trust, or would like to discuss your personal circumstances, please contact us.