Inheritance tax is changing: what business owners need to know

If you own a family business, farm or land, you may have heard that inheritance tax (IHT) rules have changed. While the headlines have caused concern, the key message is this: don’t panic, but don’t ignore it either. Our Lifetime Planning solicitors can offer you information and advice about what you can do to plan for your circumstances.

In April 2026, important changes came into effect for agricultural property relief (APR) and business property relief (BPR). These reliefs have historically played a vital role in helping farms and family businesses pass from one generation to the next without triggering a large inheritance tax bill.

Understanding what’s changed and reviewing your plans now can give you and your family more choice, flexibility and peace of mind.

What is APR and BPR?

APR and BPR are inheritance tax reliefs that can reduce, or even eliminate, the IHT due on qualifying agricultural or business assets when someone dies, including IHT that may arise on certain lifetime gifts of qualifying assets that become taxable on death.

Until now, qualifying assets could often pass 100% free of inheritance tax, regardless of their value. For many farming families and business owners, this business inheritance tax relief has been essential in keeping businesses intact and viable for the next generation.

What changed in April 2026?

In the Autumn Budget 2024, the government announced that unlimited relief would come to an end.

Under the revised rules:

• Each individual has a £2.5 million cap which applies to the combined value of qualifying assets eligible for 100% APR or BPR
• Any qualifying assets above £2.5 million receive 50% relief
• This means the excess value could face inheritance tax at an effective rate of 20%
• Any unused allowance is transferable between spouses and civil partners, meaning married couples or civil partners can pass on qualifying assets worth up to £5.65 million tax-free by combining two £2.5 million agricultural/business property allowances and two £325,000 nil‑rate bands, if available

This follows the government’s earlier proposal of a £1 million cap for agricultural and business property reliefs. The increase to £2.5 million, announced in a press release on 23 December 2025, was presented as a partial change in approach following opposition from farming and rural communities, but it still represents a major shift.

Why this matters for you

For many families, particularly those with land-rich or asset-heavy businesses, these changes could result in a significant inheritance tax bill where none was expected before.

Now that unlimited relief has ended for some qualifying assets, it’s essential to:

• Review the value of your assets
• Revisit wills, trusts and succession plans
• Consider whether your current arrangements still achieve what you want

Plans that worked well under the old rules may no longer deliver the outcome you expect, especially where inheritance tax and business assets are closely connected.

Practical steps to take now

1. Check whether your existing plans still work

Wills, trusts and business succession plans should all be reviewed in light of the new rules. Small changes in legislation can have big consequences, particularly when planning for inheritance tax on a business.

2. Think beyond tax

Good planning isn’t just about inheritance tax. It’s also a chance to step back and think about what matters most to you - protecting your family, keeping the business viable, and ensuring clear arrangements are in place for the future.

3. Make sure your figures are up to date

The value of farms, land, businesses, investments and company shares changes over time. Accurate, current valuations are essential for effective inheritance tax planning, including where there may be inheritance tax on company shares.

4. Put the right safeguards in place

Consider Lasting Powers of Attorney (LPAs) so that trusted people can manage your affairs if you’re unable to do so yourself in the future.

5. Talk it through

The best plans are built on clear communication. Open conversations with family members and business partners can help avoid misunderstandings and disputes later on.

A review today can protect your family tomorrow

Early advice still gives you more options and greater control, particularly if your current plans were made before the new rules came into effect.

A specialist lawyer, such as an accredited Lifetime Lawyer, working with your financial/tax adviser, can help you navigate these changes, understand your choices, and put a plan in place that reflects both your financial position and your family values.

Inheritance tax rules may have changed, but with the right guidance, you can still plan with confidence.

Contact us 

Emma Morris is an Accredited Lifetime Lawyer. This means she is a specialist in later-life and succession planning, with expert training to help families, business owners and farm owners navigate complex inheritance matters.

Working with a Lifetime Lawyer gives you a trusted legal adviser who can:

• Explain how the APR and BPR changes that came into effect in April 2026 could affect your estate or business
• Review your wills, trusts and succession plans to make sure they still work as intended
• Help you plan ahead with confidence, protecting your family and assets for the future

If you’re concerned about inheritance tax for your business, business property relief for inheritance tax, or planning for the next generation, get in touch with one of our Lifetime Lawyers:

Malton – 01653 600070
Emma Morris, Eleanor Hodgson

Pickering – 01751 472121
Emma Silkstone

York – 01904 624185
Sharon Richardson, Belinda-Jane Poulter