Inheritance Tax Relief Changes Confirmed – What You Need to Know

The content of this communication is only suitable to business owners and/ or experienced investors with a potential Inheritance Tax (IHT) issue.

First announced in the government’s Autumn Budget 2024, major changes to Business Relief (BR) and Agricultural Relief (AR) have now been confirmed in draft legislation. These rules, due to take effect from 6 April 2026, will reduce the level of inheritance tax relief available for those passing on business or farming assets.

While there was significant lobbying for amendments, the government has confirmed that the changes will go ahead largely as planned. For business owners, landowners and trustees, this may mean a need to revisit succession plans.

 

What is changing?

At present, Business Relief and Agricultural Relief can provide 100% relief from Inheritance Tax (IHT) on qualifying assets. From April 2026, that 100% relief will be capped at a combined total of £1 million. Any value above that threshold will only be eligible for 50% relief.

Key points confirmed in the draft legislation include:

• The £1 million allowance will not be transferable between spouses, unlike the standard IHT nil rate bands.
• The cap will apply to lifetime gifts made on or after 30 October 2024, if the donor dies on or after 6 April 2026.
• Trustees will also be subject to the new limit, and AIM shares will see relief reduced from 100% to 50%.
• Some existing trusts created before 30 October 2024 will benefit from transitional protections.

 

What this means for you

These changes are set to reshape how agricultural and business assets are passed on, with less relief available than before. If your estate planning relies on the current rules, it may be time to consider your options.

 

Practical steps to consider

• Review your will – ensure your estate passes in a tax-efficient way under the new rules.
• Consider early gifting – transferring assets before April 2026 may help preserve today’s full reliefs, especially where lifetime planning is an option.
• Understand trust implications – trusts set up before and after October 2024 will be treated differently.
• Think about valuation – in some cases, restructuring ownership may help reduce your IHT exposure.

 

Looking ahead

The new £1 million allowance will begin rising with inflation from 2030, but for now the focus is on how best to prepare before April 2026. With limited flexibility in the final rules, early planning could help avoid a larger Inheritance Tax (IHT) bill down the line.

If you think these changes could affect your estate or long-term plans, speak to your Rosebridge adviser. We are here to help you make informed decisions before the rules come into effect.

 

Get in touch

To understand how the confirmed inheritance tax changes to Business Relief and Agricultural Relief could affect your estate or succession plans, contact our experienced team of Chartered Financial Planners today.

Ramsbottom office: Email enquiries@rosebridgeltd.com or call 01204 300010
Chester office: Email enquirieschester@rosebridgeltd.com or call 01244 569141
Leeds office: Email enquiriesleeds@rosebridgeltd.com or call 0113 243 7100

 

Please Note

BR schemes are aimed at sophisticated investors who have an income tax liability that the investment can help reduce and who are prepared to accept the high risks associated with these investments. Do not invest unless you are prepared to lose all the money you invest. This is a high-risk investment, and you may not be protected if something goes wrong. Rates of tax, tax benefits and allowances are based on current legislation and HM Revenue & Customs practice. These may change from time to time and are not guaranteed. In this case, the IHT relief available on this investment may be lost. Changes in law can have retrospective effect.