Clarissa Levi
- Art & Heritage Counsel
- Art & Luxury Law
Business Property Relief restrictions – Inheritance Tax planning with art and heritage assets
Changes to Inheritance Tax (IHT) affecting Business Property Relief (BPR) and Agricultural Property Relief (APR), initially heralded in the 2024 Autumn Budget, are due to become effective from 6 April 2026. Where APR/BPR had previously been relied upon for agricultural or business assets, new IHT planning may now be required. Property which qualifies as “national heritage” may be eligible for protective measures which can offer an alternative.
A new threshold for BPR
From April, 100% BPR relief will be capped at £1 million. Any qualifying assets above this threshold will receive only 50% relief, resulting in an effective IHT rate of 20% on the excess. This will be a change from the current system, where qualifying assets benefit from full relief regardless of value, and could mean that estates previously exempted from IHT may now face substantial tax liabilities.
What are heritage assets?
The UK’s national heritage includes buildings of historic or architectural interest; land which is of historic, scenic or scientific interest; and objects and collections which are of national, artistic, historic or scientific interest. Preferential tax treatment exists for property of this kind, designed to encourage its preservation.
No restrictive definition of heritage property exists, and expert advice may be useful in judging whether a particular house, piece of land or work of art is likely to qualify as being of sufficient heritage interest to be conditionally exempted from IHT or offered in lieu of it. A common misconception is that heritage reliefs only apply to fine art, whereas in fact heritage property can equally include man-made landscapes and agricultural land. A semi-detached or terraced house in the right circumstances might be considered just as much heritage property as a castle.
The tax regimes for the protection of national heritage property include:
Conditional Exemption: This is a deferral of IHT rather than an outright relief from it. Heritage property deemed pre-eminent for its national, scientific, historic or artistic interest can be bequeathed down the generations free from IHT, provided the property is kept protected in certain agreed ways and reasonable public access to it is provided. In addition to individual objects which are important in their own right, the entire historic contents of some houses can be conditionally exempted from IHT.
Acceptance in Lieu Scheme: Important works of art or other objects and property can be offered to the nation in settlement of IHT. As well as being themselves exempted from IHT, items which are accepted in lieu of tax benefit from an incentive which increases the value of the offer when compared to settling the IHT liability with money.
Expert guidance
Heritage tax measures apply to more than just Old Master paintings. Wedlake Bell advises custodians of historic homes, landed estates, and national collections on succession, tax planning, diversification, and preservation strategies. With specialists in heritage tax reliefs, manorial rights, and luxury assets, we help clients navigate APR/BPR reforms and protect what matters most for generations to come. For estate planning that combines the best of heritage and private wealth expertise to give you all the options, please contact Clarissa Levi or your usual Wedlake Bell adviser.
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.
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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