Budget Changes – Time To Act

Following the November 2025 budget and a further government announcement in December, there is now greater clarity on the changes to Business Property Relief (BPR) and Agricultural Property Relief (APR).

After 6 April 2026, Inheritance Tax (IHT) will be charged at 20% on business or agricultural assets which exceed the new £2.5m allowance and nil rate band allowance. Some good news is that the £2.5m allowance is also going to be transferable between spouses.

This means after 6 April 2026, a married couple with qualifying assets will be able to leave £5.65m free of IHT (this is two APR/BPR £2.5m allowances and two nil rate bands of £325,000). If either of their estate is valued under £2m on death, then a further £350,000 residence nil rate band may be available.

It is worth remembering that pensions will be brought into the scope
of IHT from 6 April 2027.

Those with qualifying assets should now review the total value of their assets and their Wills and consider their options for efficient tax planning which could include:

Bringing forward succession plans to bring the next generation into the business or farm now.

Making gifts. If you are going to make gifts to children or grandchildren, then consider how the gift is held by them.  This will depend on their age and personal circumstances. You need to survive seven years for the gift to fall out of your estate if it is made before 6 April 2026. However, if you were to die after 6 April 2026, only the first £2.5m (or £5m if you are married) would be covered by 100% BPR or APR during the seven-year period, so timing could be crucial.

Consider a trust. A trust can be useful to help pass on shares or assets owned by a family business. A family trust could be used and there is usually no IHT to pay on trust assets when one of the beneficiaries dies. Instead, there is a IHT liability paid every ten years on the market value of the trust assets at a maximum rate of 6%. This is much easier to plan for than a potential 40% IHT liability on death if the assets are owned personally.

All of these options should be considered along with your general tax planning advice, and we are happy to work with your accountants to ensure any changes made are accurately reflected in your Will.

Sarah Astley can be contacted at s.astley@gullands.com