Budget 2025: Chancellor announces transferability of agricultural property relief and business property relief

The Chancellor, Rachel Reeves, used her highly anticipated Budget on 26 November 2025 to announce that the £1 million allowance for agricultural property relief (APR) and business property relief (BPR) will be transferable between spouses and civil partners with effect from 6 April 2026.

This is a welcome – if not overdue – concession. However, it has not silenced criticism from industry groups and professionals, as the government has left its wider reforms which limit the availability of APR and BPR from April 2026 unchanged.

What is changing?

As summarised in  our recent In Trust article, “Finance Bill 2025/2026: Government confirms Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms effective from April 2026”, the draft Finance Bill published on 21 July 2025 introduced a major shift from the current position of unlimited 100% inheritance tax (IHT) relief for qualifying agricultural and business property, to a limit of £1 million per individual from 6 April 2026. This allowance will refresh every seven years, and provision has been made for it to increase in line with the consumer price index from April 2030, although this will be at the government’s discretion.

Initially, the £1 million allowance was not transferable between spouses or civil partners. However, the Chancellor has now confirmed that any unused allowance can be transferred to a surviving spouse or civil partner, and may be used on the second death even where the first death occurred before 6 April 2026. This aligns APR/BPR with the nil-rate band (currently £325,000) and residence nil-rate band (currently £175,000) both of which are already transferable between spouses and civil partners.

While the ability to transfer any unused relief provides some welcome flexibility, the fundamental cap remains. With just over four months until the reforms take effect, now is the time to review your estate planning strategy.

Action points

As noted in our previous article, some initial planning considerations are outlined below; however, bespoke advice should always be sought to guarantee suitability for your individual circumstances.

1. Review your assets: Confirm the extent of your agricultural/business property and check ownership structures for any possible qualification issues.
2. Get valuations: Obtaining a detailed and accurate valuation of your assets is key to understanding and planning for your likely IHT exposure post-6 April 2026. This could take some time and should therefore be prioritised.
3. Review your Will: ensure it maximises IHT relief for your APR/BPR assets under the new rules.
4. Consider lifetime gifts: (either outright or into trust) of your APR/BPR property to mitigate IHT exposure.
5. Plan for liquidity: Consider funding options for future IHT liabilities including life insurance.
6. Trustee review: Calculate the trust’s IHT liability under the new rules and consider financing and mitigation planning; this may include possible restructuring.

How we can help

Our Private Client team can help you navigate the forthcoming changes to APR and BPR. The implications for affected individuals will be considerable, but we can offer bespoke advice to help you adapt your estate and succession strategy, mitigate exposure to IHT, and preserve your wealth across generations.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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