Government Confirms £2.5M IHT Relief Threshold
The Government has today announced an important update to the inheritance tax (IHT) treatment of qualifying business and agricultural assets. From April 2026, the limit for full relief under Business Property Relief (BPR) and Agricultural Property Relief (APR) will increase to £2.5 million per person, up from the £1 million level previously announced. The change will be legislated in Finance Bill 2026.
What This Means In Practice
Up to £2.5 million of qualifying business or agricultural assets per individual can pass with 100% IHT relief.
Married couples and civil partners may therefore be able to benefit from up to £5 million of combined relief, where ownership is structured appropriately.
Any qualifying value above £2.5 million per person will continue to be exposed to IHT.
The change applies equally to business owners and farmers.
This adjustment materially changes the IHT exposure some families and businesses were previously anticipating.
Key Planning Considerations
Existing succession and estate plans may need to be revisited, particularly where assumptions were based on a £1 million relief cap.
Asset ownership between spouses or civil partners should be reviewed to ensure the increased allowance can be fully utilised.
Larger estates may still face meaningful IHT exposure above the new threshold, making forward planning and liquidity considerations important.
Eligibility rules for BPR and APR remain unchanged, so trading status, asset use and ownership structures continue to be critical.
With the rules to take effect from April 2026, there is a clear window to review arrangements well in advance.
While this change offers welcome additional headroom, it does not remove the need for careful, forward-looking planning to protect business and family wealth.
If you would like to discuss what this means in your circumstances, or review existing arrangements in light of the new threshold, please get in touch.
Merry Christmas - And Thank You
As we approach the end of the year, we would also like to take this opportunity to thank you for your trust, support and collaboration over the past year. 2025 has been a year of political change and evolving tax policy, and we are grateful to have worked alongside you through an increasingly complex landscape.
Looking ahead to 2026, we remain fully committed to supporting UK business owners and those who advise them, helping you navigate change with clarity and confidence, whatever the year may bring.
From all of us, we wish you and your loved ones a very Merry Christmas and a healthy, happy and prosperous New Year. We look forward to reconnecting in 2026 and continuing to work together.
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