Business Property Relief and Agricultural Property Relief – changes ahead

From April 2027 (under current government proposals), a number of changes to Inheritance Tax (IHT) are due to take effect. Alongside changes affecting pensions, reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) mean some business owners, farming families and landowners may need to review their estate and succession plans sooner rather than later.

While not everyone will be affected, understanding what is changing and seeking advice early can help families make informed decisions with confidence.

What are Business Property Relief and Agricultural Property Relief?

Business Property Relief and Agricultural Property Relief are longstanding IHT reliefs designed to help family businesses and farms pass from one generation to the next without creating an unaffordable tax burden.

Historically, they have enabled many families to transfer qualifying business and agricultural assets with significant IHT relief, helping to preserve businesses and farms that may otherwise have needed to be sold to meet a tax liability.

Further information about the planned reforms is available in the Government guidance on the changes to Business Property Relief and Agricultural Property Relief.

What is changing from April 2027?

Under current government proposals, from April 2027, changes to the rules mean that some qualifying business and agricultural assets may no longer benefit from the same level of IHT relief as before, particularly where the value of those assets exceeds certain thresholds.

As a result, some families who previously expected their business or farming assets to pass to the next generation with full relief may now face an IHT liability.

However, the impact will vary depending on the value and structure of an estate, so it’s important not to assume the changes will affect everyone in the same way.

Why early planning matters

Although the changes are not due to take effect until April 2027, reviewing your arrangements now provides valuable time to consider your options.

Areas worth reviewing include:

Taking advice early can help identify planning considerations that may be relevant to your circumstances.

Every family’s circumstances are different

Business owners and farming families often have unique financial and family circumstances, which means there is rarely a single solution that suits everyone. The right approach will depend on a range of factors, including the nature of your assets, your long-term succession objectives and your wider estate planning arrangements.

Professional advice can help you understand how the changes may apply to your individual circumstances and identify any steps that may be appropriate before April 2027.

Time to review your plans

With several IHT changes approaching, including reforms affecting pensions, Business Property Relief and Agricultural Property Relief, now is a sensible time to review your estate and succession planning.

Having conversations early allows families to understand their position, explore the options available and make considered decisions without unnecessary pressure.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate Will writing, tax and trust advice and certain forms of estate planning. Tax treatment depends on individual circumstances and may be subject to change. Gifting and trust strategies can have tax implications and may not be suitable for everyone.

This article is for information purposes only and does not constitute personal financial, legal or tax advice.