The government has announced a substantial softening of the planned inheritance tax (IHT) reforms affecting Business Property Relief (BPR) and Agricultural Property Relief (APR).
From 6 April 2026, the amount of qualifying business and agricultural assets eligible for 100% IHT relief will increase to £2.5 million per person. This is a £1.5 million uplift on the previously proposed cap and is expected to significantly reduce the number of families impacted—particularly those in the farming sector.
How we got here
Under the current rules, 100% APR and BPR are not capped, meaning qualifying assets can pass on death without an IHT charge (subject to the usual conditions).
However, the government had planned to introduce a restriction from April 2026, limiting full relief to £1 million per person, with qualifying assets above that level only receiving 50% relief.
The proposals attracted widespread criticism, especially from farming families, where asset values can be high despite relatively modest disposable income. In response, the Autumn 2025 Budget introduced an important modification: the £1 million allowance would be transferable between spouses and civil partners.
Then, only a few weeks later, the government announced a further and much more generous change increasing the allowance to £2.5 million per person.
What the revised rules mean in practice
From 6 April 2026:
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Each individual will have a £2.5 million allowance covering assets that would otherwise qualify for 100% APR and/or BPR
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Any qualifying assets above the available allowance will generally receive 50% relief
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The allowance will be transferable between spouses and civil partners, meaning unused allowance on first death can be claimed on second death
For many families, this removes the immediate pressure to restructure ownership or undertake complex planning simply to preserve relief.
Married couples and civil partners
For couples, the change is particularly valuable.
If allowances are fully available, a couple will be able to pass on up to:
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£5 million of qualifying business and/or agricultural assets at 100% relief, plus
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£325,000 each under the standard nil rate band (NRB)
That takes the total potential “tax-free” value to £5.65 million, before considering any additional reliefs or exemptions that may apply.
Where qualifying assets exceed the available allowances, the excess will be subject to 50% relief, rather than full exposure to IHT.
Widows and widowers
Transferability is also highly relevant where one spouse or civil partner has already died.
A surviving spouse’s estate can still claim unused allowances, even where the first death occurred many years ago. This is important because the allowance is not dependent on the first spouse having owned business or agricultural assets themselves.
Planning tip: even where the first spouse owned no qualifying property, their unused allowance may still be available to the surviving estate, increasing the value that can pass IHT-free.
Key takeaway
The government’s decision to increase the 100% relief cap to £2.5 million per person is a major shift from the original plan and will protect a larger number of family farms and business owners from the impact of the reforms.
That said, the rules are still changing from April 2026, and estates with higher value business or agricultural interests may still face reduced relief on assets above the available allowances.