APR & BPR Relief Changes from April 2026: What You Need to Know

From 6 April 2026, the government is introducing significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) for Inheritance Tax (IHT) purposes. These changes will affect many estates, especially those with high-value farmland or business assets and represents a large shift in IHT planning for family businesses and agricultural property.

The Current Rules

At present, qualifying agricultural and business assets can reduce an estate’s IHT liability by up to 100% of their value and in some cases up to 50% of their value, without a cap. Meaning, in theory, you can pass on a farm or a family business free of IHT or at a reduced charge of IHT, regardless of size. This relief has long been the foundation of succession planning for farming families and family-run businesses.

Major Changes From 6 April 2026

1. New £2.5 Million Cap on 100% Relief

From April 2026, 100% APR/BPR relief will only apply up to £2.5 million of combined qualifying agricultural and business property per individual. Any value above this threshold will attract a reduced relief of 50%, so the effective IHT rate on excess assets is 20% instead of zero. This replaces the existing unlimited relief.

The £2.5 million allowance will apply during lifetime and on death. This means that qualifying assets that have been gifted on or after 30 October 2024, where the donor dies on or after 6 April 2026, and within seven years of the transfer, will reduce the allowance available on death.

2. Transferability Between Spouses and Civil Partners

Unused APR/BPR allowance can be transferred to a surviving spouse or civil partner in a similar way to the nil-rate bands. This means a couple could potentially shelter up to £5 million of qualifying assets from IHT.

3. Impact on Trusts

Trusts holding APR/BPR qualifying assets will also be affected. A similar £2.5 million cap will apply to qualifying agricultural and business property held in trusts for calculating ten-year charges and exit charges.

This adds a layer of complexity for trustees and settlors planning long-term inter-generational wealth transfer structures.

4. AIM and Other Shares Not Listed on Recognised Exchanges

Shares in companies designated as “not listed” on the markets of recognised stock exchanges (AIM companies and EIS companies quoted on AIM), will only be entitled to relief at 50% (currently they receive 100% relief).

5. Interest-Free Instalments Extended

The option to pay IHT by up to 10 equal annual instalments, interest free, will be extended to all property eligible for APR/BPR.

This should help estates manage cash flow liabilities rather than having to raise large lump sums at the point of death.

Practical Steps for Planning

Many farms may exceed the new £2.5m cap on relief once land, stock and buildings are aggregated and without planning, additional value above the cap could face an inheritance tax liability.

Where business assets are a major part of total wealth, these changes could materially affect succession planning and the timing of transfers or gifts.

It is important to stay ahead with proactive planning. Consider bringing succession planning forward by introducing family members earlier and the options around gifting qualifying assets during lifetime with the hope of surviving seven years.

Review family ownership structures, trust planning and consider spouses’ transferable allowances.

Conclusion

The April 2026 APR/BPR reforms mark a significant departure from the historical unlimited relief regime. While the introduction of a more generous cap and transferability between spouses softens the impact, the changes still create strategic challenges for estate succession. With any type of planning, both legal and tax advice should be sought and at PCS we can offer a holistic approach, working in conjunction with other trusted advisors.