This article explains the changes and what they may mean for two groups:
- Farmers and family business owners
- People who use BR‑qualifying investments, such as Alternative Investment Market (AIM) shares
1. Farms and family businesses (APR and BR)
These changes mainly affect people who own farmland or run family‑run businesses.
What’s changing?
In the past, APR and BR could give up to 100% IHT relief on qualifying land, farm buildings or business interests.
The government first planned to limit 100% relief to £1 million from 2026. After strong opposition – including farmer protests, if you recall the tractor rally in London – the limit was increased to £2.5 million. This allowance can be shared between spouses or civil partners.
What this means in practice
- A married couple or civil partners can pass on up to £5 million of qualifying business or agricultural assets with no IHT.
- Anything above this amount may still receive 50% relief.
- Some assets that once had 100% protection may now get less.
These changes may affect how farms and family businesses plan for the future. For example, families may need to think carefully about when to pass on assets to avoid a large tax bill.
2. BR‑qualifying investments (including AIM shares)
Some people use business relief qualifying investments – such as certain AIM shares – to help reduce the IHT bill on their estate.
How the rules now apply
- AIM shares usually qualify for 50% relief, not 100%.
- This can reduce the potential IHT rate on these shares from 40% to 20%, depending on HMRC rules.
- To qualify, shares normally need to have been held for at least two years at the time of death.
Important risk warnings
BR‑qualifying investments:
- Are often in smaller or unquoted companies.
- Can carry higher risk than mainstream investments.
- May fall in value quickly.
- Can be harder to sell when needed.
- Are not guaranteed to stay qualifying – HMRC makes the final decision.
These types of investments can help some people with estate planning, but they don’t suit everyone.
A quick reminder of IHT limits
- The standard nil‑rate band is £325,000.
- Some estates may also benefit from the residence nil‑rate band of up to £175,000, depending on the situation.
- Anything above these limits is usually taxed at 40% unless reliefs apply.
Knowing how APR and BR fit into these limits can make planning easier.
Here’s an example
Scenario:
A married couple owns £6 million of qualifying business assets.
Under the new rules:
- First £5 million (£2.5M per person) – no IHT
- Remaining £1 million – 50% relief, so only £500,000 is taxable
- IHT payable: 40% × £500,000 = £200,000
This shows how the £5 million allowance and 50% relief work together.
Reviewing your estate plans
Because these changes are significant, it may be a good time to review your estate plans – especially if they rely on older APR or BR rules.
Questions to think about
- How will the new rules affect your potential IHT bill?
- Are you relying on reliefs that may now be reduced?
- Would starting your planning earlier help?
- Could different planning options work better when combined?
Want to know more?
Inheritance tax and estate planning can be complex. Speaking to a professional adviser can help you understand the changes and how they fit with your wider financial plans.
We’re here to help when you’re ready, so you can plan with confidence and in a tax‑efficient way.
Important information
Tax treatment depends on individual circumstances and may change in future.
Eligibility for relief is decided by HMRC.
The Financial Conduct Authority does not regulate Estate Planning.
This article is for information only and is not personal advice.
