"Starting on 6 April 2026, full relief on Agricultural Property Relief (APR) and Business Property Relief (BPR) will be limited to a combined total of £2.5 million per estate. Any qualifying value above this threshold will be eligible for only 50% relief, instead of the current 100% exemption. This change means that estates holding valuable farms or family businesses could face significantly higher inheritance tax liabilities."
"This situation could result in a "dry" tax charge, particularly when existing shareholder or partnership agreements automatically transfer ownership of the business to a surviving co-owner. As a result, the deceased's family may be left without ownership, shares, or proceeds to cover the tax."
"Irwin Mitchell emphasises the urgency for families to review their wills, shareholder agreements, partnership deeds, and succession structures to ensure that their assets and tax liabilities are aligned before the new rules are implemented. Without proper planning, families could face substantial tax bills without receiving any direct financial benefit from the business or farm."
Starting April 6, 2026, inheritance tax relief on Agricultural Property Relief and Business Property Relief will be capped at £2.5 million combined per estate. Values exceeding this threshold will receive only 50% relief instead of current full exemption. This creates substantial tax exposure for estates holding valuable farms or businesses. A particular concern is the "dry" tax charge scenario, where automatic ownership transfers to surviving partners leave families with tax obligations but no assets or proceeds to cover them. The government permits 10-year installment payments for qualifying properties, but the tax burden remains on the estate. Legal experts strongly recommend families immediately review wills, shareholder agreements, partnership deeds, and succession structures to align assets with tax liabilities before implementation.
#inheritance-tax-reform-2026 #agricultural-property-relief #business-succession-planning #dry-tax-charge #estate-planning
Read at London Business News | Londonlovesbusiness.com
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