For deaths on or after 6 April 2026, the amount of qualifying agricultural and business property that can receive 100% Inheritance Tax relief is limited to a combined £2.5 million per person. Qualifying value above the available allowance normally receives 50% relief, creating an effective Inheritance Tax rate of up to 20% on that excess before other exemptions and nil-rate bands are considered.
The change affects Agricultural Property Relief and Business Property Relief together. Owners of higher-value farms, trading businesses and qualifying shareholdings should review valuations, ownership and succession arrangements. Our guide to the recent inheritance tax changes explains the wider position.
What changed on 6 April 2026?
The reform was announced at Autumn Budget 2024 with a proposed £1 million allowance. The government increased it to £2.5 million in December 2025 before the rules took effect.
| Asset or position | Relief before 6 April 2026 | Relief from 6 April 2026 |
|---|---|---|
| Qualifying agricultural and business property previously eligible for 100% relief | 100% | 100% within the combined £2.5 million allowance; 50% above it |
| AIM and other qualifying shares traded on a recognised exchange but designated “not listed” | 100% | 50% in all cases; these shares do not use the £2.5 million allowance |
| Other qualifying unquoted trading-company shares | 100% | 100% within the allowance; 50% above it |
The GOV.UK guidance on apportioning the relief explains how the allowance is applied across qualifying assets and lifetime gifts.
Transfers between spouses and civil partners
Any unused allowance can be transferred from a deceased spouse or civil partner if the personal representatives make the required claim. This can increase the survivor’s allowance to as much as £5 million. Where the first death occurred before 6 April 2026, the full £2.5 million is treated as available for transfer.
A couple does not automatically pass £5 million tax-free. The outcome depends on whether the assets qualify, any lifetime gifts, other estate assets and the correct transfer claim.
Lifetime gifts and trusts
Qualifying gifts made on or after 30 October 2024 can use the allowance if the donor dies within seven years on or after 6 April 2026. The allowance is applied to qualifying gifts in date order before any remainder is apportioned across qualifying property in the death estate.
Trusts do not automatically create a fresh £2.5 million allowance each. Their treatment depends on the settlement date, settlor and type of trust, with rules intended to prevent several trusts multiplying the relief. This makes reviewing your will important. Mirror wills or a life interest trust may suit some families, but only after tailored advice.
A practical example
Suppose one person dies owning a qualifying trading company worth £4 million and has the full £2.5 million allowance. The first £2.5 million receives 100% relief. The remaining £1.5 million receives 50% relief, leaving £750,000 chargeable before the nil-rate band and other exemptions.
The maximum tax attributable to that £750,000 would be £300,000 at 40% if no nil-rate band were available. The actual bill may be lower. Splitting ownership between spouses does not by itself guarantee a better result; spouse exemption, timing and transferred allowances all matter.
What families should do now
Obtain a professional valuation, review gifts made since 30 October 2024 and confirm which assets qualify. Update succession plans and arrange liquidity for any tax. Inheritance Tax on property qualifying for Agricultural or Business Relief can generally be paid in ten equal annual instalments without interest, although selling the property can make the outstanding balance payable.
Without a valid will, assets pass under the intestacy rules, which may not suit the business. Planning ahead can reduce uncertainty and the risk of executor disputes when the family disagrees over an estate. Our civil litigation solicitors can assist if a dispute develops.
Our probate solicitors in London can handle the grant and tax process. If the business is owed money, our debt recovery service can help pursue it.
Get ahead of the change
Accurate valuation and careful will drafting are now more important for valuable family businesses and farms. Our solicitors in North London can review your will, ownership structure and succession options before a tax liability becomes unavoidable.