Kim Jarvis, Protection Technical Specialist- Tax and Trusts, Royal London

In the Autumn Budget 2024, the government announced its planned changes to agriculture property relief and business property relief. On 21 July 2025, the Government released draft Finance Bill 2025 / 26 legislation detailing proposed inheritance tax changes. Below is our understanding of the change and the impact on business owners.

Key facts

• From 6 April 2026, a new £ 1 million 100 % relief allowance will apply to the combined value of assets eligible for Agricultural Property Relief( APR) and Business Property Relief( BPR) for both individuals and trusts.

• Assets exceeding the £ 1 million allowance will qualify for 50 % relief instead of 100 %, resulting in an effective 20 % inheritance tax charge on the remaining value.

• The £ 1 million relief allowance will refresh every seven years for lifetime gifting( and every ten years for trusts) and will be increased in line with the Consumer Prices Index from April 2030, subject to government approval.

• Shares in companies not listed on recognised stock exchanges( such as AIM companies and EIS shares listed on AIM) will only be entitled to 50 % relief under the new rules.

• The unused allowance cannot be transferred to a spouse or civil partner, so estate planning and will reviews may be necessary to ensure full benefit of the changes.

What is business property relief? Business property relief( BPR) is an inheritance tax relief which applies to qualifying business assets. It was originally introduced in 1976 to allow businesses to be passed down either inheritance tax( IHT) free or at a reduced rate without the family of the deceased having to sell the business.

What are the current rules? BPR is available to business owners who hold qualifying business assets for at least two years and continue to hold them on their death.

100 % relief is available for:

• A sole trader or partner interest in a trading business.

• A holding of shares in an unquoted company, including shares listed on the Alternative Investment Market( AIM companies).

• Enterprise Investment Schemes( EIS).

50 % relief is available for:

• A controlling holding of shares in a quoted company.

• Land, buildings, machinery or plant used wholly or mainly for the purposes of the business.

APR is available to farmers who have either occupied and actively farmed the land for a minimum of 2 years or owned the land for at least 7 years while it has been farmed by another person.

100 % relief is available:

• If the land is actively farmed by the owner or let under a qualifying tenancy.

50 % relief is available:

• If the land is owned but not directly farmed by the owner.

What is agriculture property relief? Agricultural Property Relief( APR) is an inheritance tax relief, which helps farmers and landowners pass on agricultural property without a large tax bill, either during their lifetime or when they die.

12 | PROTECTION ADVISER | AUTUMN 2025 |