Finance Bill 2025/2026: Government confirms Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms effective from April 2026

There now follows an eight week technical consultation period closing on 15 September 2025. Subject to any consequential amendments to the draft legislation, the changes to APR and BPR will take effect from 6 April 2026, and will have wide-reaching implications for land and private business owners and their estate planning, trust structures, and succession strategies.

What is changing?

The proposals announced in October 2024 attracted widespread criticism from industry groups and professionals alike; however, the government has not made any substantive concessions to their original plans to limit the availability of APR and BPR from April 2026.

The significant points from the draft legislation are therefore as follows.

• £1 million allowance for individuals  – instead of the current unlimited 100% relief for qualifying agricultural and business property (“APR/ BPR property“), 100% relief will be capped at £1 million. The allowance will refresh every seven years for individuals and will potentially increase in line with the consumer prices index (CPI) from 6 April 2030. Controversially, and in contrast to the IHT nil rate band, the allowance will not be transferable between spouses and civil partners.
• 50% relief – any value of APR/ BPR property in excess of the £1 million allowance will only attract 50% relief.
• AIM shares – the rate of BPR will reduce from 100% to 50% for all shares not listed on the markets of recognised stock exchanges, such as AIM, and for qualifying shares listed on foreign exchanges which are not a recognised stock exchange.
• Relevant property trusts – trusts that are subject to the IHT “relevant property regime”  and are set up before 30 October 2024 will have a £1 million allowance per trust; whereas, those set up after 30 October 2024 will share the £1 million allowance with other trusts set up by the same settlor. The allowance will refresh every ten years.
• Qualifying interest in possession (“QIIP”) trusts – trusts in which a beneficiary (a “life tenant“) has an entitlement to income and such entitlement qualifies as a QIPP for IHT purposes will also have a £1 million allowance but this will be shared with the assets in the life tenant’s personal estate on death.
• Transitional rules – transfers of APR/ BPR property on or after 30 October 2024 and before 6 April 2026 will be subject to transitional rules such that, although the original transfer will be assessed under the current APR/ BPR regime, if the transfer is not survived by seven years, it will be reassessed on death under the new APR/ BPR regime.
• Related property rules – reforms had been suggested at the consultation stage to amend how APR/ BPR property was valued if fragmented between different trusts. These have been dropped. Where  multiple trusts are set up by the same settlor on or after 30 October 2024 the APR/BPR allowance will be applied chronologically.
• Instalment option – the option to pay IHT by equal annual interest-free instalments over ten years will be extended to all property which is eligible for APR/ BPR.

Action to take now

With just over nine months to go until 6 April 2026, now is the time to understand the potential impact these reforms will have on your estate and begin planning accordingly. Some basic planning points are as follows but all advice will need to be bespoke and tailored to your individual situation.

1. Confirm the extent of your agricultural and/or business property for IHT purposes including a review of their ownership structures under the current rules to identify any potential qualification issues.
2. Obtain valuations of your APR/ BPR property and the likely IHT exposure following 6 April 2026.
3. Review your Will to ensure it maximises IHT relief for your APR/ BPR assets under the new rules.
4. Consider whether to make lifetime gifts (either outright or into trust) of your APR/ BPR property to mitigate IHT on those assets on death.
5. Consider funding options for any future IHT liability including life insurance.
6. Trustees should 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 long-standing and experienced Private Client team can help you navigate the forthcoming changes to APR and BPR. The implications for affected clients 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.

For further information or advice, please contact a member of our Private Client team or your usual Wedlake Bell adviser.

This article is for general information only and does not seek to give legal advice or to be an exhaustive statement of the law. Specific advice should always be sought for individual cases.

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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