The Autumn Budget 2025 introduced major reforms to Inheritance Tax (IHT) reliefs that will reshape estate planning for agricultural and business assets. For Private Client advisors, and their clients, understanding these changes is critical.
Autumn 2024
In Autumn 2024, the Chancellor of the Exchequer, introduced a cap on the availability of 100% Inheritance Tax relief on agricultural property and business property. Instead of the previously unlimited available allowance for either property type, the 100% relief was capped at £1 million for both property types combined, with 50% relief applying to anything above and beyond the £1 million limit, effective from 6 April 2026.
Clearly, this change had far reaching consequences for estate planning, especially for those living in rural areas and managing rural businesses and/or farms.
The response from the private client sphere was to ensure that, amongst other measures, married couples had shared their assets effectively to use up each £1 million relief on their death. This was because the relief was not transferable between spouses or civil partners.
Autumn 2025
In the latest budget, the previously non-transferable £1 million relief was to become transferable. Meaning, any unused allowance from the first spouse to die may be used by the survivor’s personal representatives on his or her death. A welcome change which will have a positive effect on the families of those with assets eligible for APR.
Although the Nil Rate Band and Residence Nil Rate have been frozen until 2030, meaning likely more IHT payable in real terms due to inflation, this is good news for farmers and rural families alike as potentially costly lifetime equity transfers in land and business assets may well be avoided, so long as appropriate provisions have been made with a valid Will and succession planning.
Bottom Line
Whilst both budgets act to tighten the availability of APR and BPR, transferability offers a strategic opportunity to mitigate your overall IHT liability with simple and effective estate planning.
Please contact the Private Client team at Paul Robinson Solicitors should you wish to discuss things further, we would be happy to help.
