THE £ 1 MILLION RELIEF ALLOWANCE WILL REFRESH EVERY SEVEN YEARS FOR LIFETIME GIFTING.
What is changing from 6 April 2026?
• Individuals will have a £ 1 million( 100 % relief allowance) which will apply to the combined value of assets that qualify for 100 % agricultural property relief( APR) and / or 100 % business property relief( BPR).
• The £ 1m allowance will apply during lifetime and on death, meaning that qualifying assets that have been gifted on or after 30 October 2024 where the donor dies on or after 6 April 2026 will reduce the allowance available on death.
• For lifetime gifting the 100 % relief allowance will refresh every seven years and will be increased in line with the Consumer Prices Index from April 2030. However, it should be noted that this won’ t be automatic, and a future government would need to implement a statutory instrument.
• For relevant property trusts there will also be a £ 1 million allowance( 100 % trust relief allowance). The 100 % trust relief allowance will refresh every 10 years.
• 50 % relief will then be available on qualifying assets more than the £ 1 million allowance, meaning an effective IHT charge of 20 %. This will apply to both individuals and trusts.
• 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 %.
• Trust exit charges will be standardised meaning all relevant property trust exit charges will be calculated on unrelieved values( before APR / BPR) regardless of whether the exit takes place before or after the first 10th anniversary.
• On death any individual’ s unused allowance cannot be transferred to a spouse or civil partner.
• The option to pay IHT by up to 10 equal annual instalments, interest free, will be extended to all property eligible for APR / BPR.
• Consultation on the draft legislation runs until 15 September 2025.
Things to consider
• As the unused allowance cannot be transferred, wills may need to be reviewed to ensure that spouses and civil partners can each benefit from the allowance.
• Need to understand IHT liability under the new rules and consider how this is to be funded. Can a life policy be taken out( placed in trust) to meet this liability.
• Should succession planning be brought forward? Maybe introduce family members earlier. Can you gift qualifying assets during lifetime with the hope of surviving seven years.
As always professional advice with need to be sought regarding both the legal and tax implications.
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| PROTECTION ADVISER | AUTUMN 2025 | 13