Upcoming Significant Reforms to the UK APR and BPR Rules

In the 2024 Autumn announcement (30 October 2024), the UK government confirmed reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) for inheritance tax (IHT) purposes.

The changes will take effect from 6 April 2026 and are expected to significantly limit the IHT relief available for qualifying assets. These reforms present a time-sensitive opportunity for individuals and advisers to act before the new rules take effect.

The reforms include: 

• From 6 April 2026, a combined cap of £2.5 million will apply to assets eligible for 100% relief under BPR and APR.
• Any amount above £2.5 million will only qualify for 50% relief.
• Any unused allowance can be transferred between spouses on death, thus enabling qualifying assets of up to £5 million in value to be passed on free of inheritance tax.
• Transfers into trust after 6 April 2026 will be subject to the cap, potentially leading to increased IHT exposure, particularly for family-owned businesses.

There is a limited window to take action. Seeking professional advice on your specific situation and potential available solutions well in advance of the implementation of the reforms is strongly recommended.