For many working individuals and business owners, the Autumn Budget 2025 has introduced further changes to Agricultural Property Relief (APR) and Business Property Relief (BPR).
However, in an end of year surprise, Chancellor Rachel Reeves has now confirmed an increase in the proposed threshold to £2.5 million, with the changes due to take effect on 6 April.
While this increase is welcome, the changes are still expected to result in additional tax liabilities for many families, particularly where business and assets have been passed down through generations.
What are the main reforms?
One of the most debated aspects of the recent Autumn Budget was the decision not to revise the thresholds that were originally announced in the 2024 Budget.
The 2024 Budget announced assets that currently qualify for 100 per cent APR or BPR relief would be reduced to 50 per cent relief on values that exceed a £1 million allowance.
Following the recent announcement, couples will now be able to pass on up to £5 million of agricultural or business assets between them, on top of the existing allowances such as the nil-rate and residence nil-rate band.
Farmers, business owners, investors and anyone relying on these reliefs are amongst those targeted and understanding how it affects your estate planning is important.
In addition, Alternative Investment Market (AIM) shares will see their BPR reduced from 100 per cent to 50 per cent, affecting long-term investments and succession planning.
How should you prepare your finances for the reforms?
Many existing estate plans may have not accounted for fiscal drag or the challenges faced by asset-rich, cash-poor estates, such as family farms and businesses.
While lifetime gifting has traditionally been an important part of succession planning, there is now alternate approaches on how to manage IHT liabilities.
Careful estate planning remains crucial with further IHT reforms expected, including the inclusion of unspent pension pots.
These changes may mean that:
Families dealing with incapacity or outdated Wills may have challenges updating their affairs in time before April 2026.
Seeking early professional advice can help assess what the new reforms and policies mean and how they will affect your estate and assets.
Why is financial planning needed?
With less than four months before the rules take effect, many individuals may struggle to review their Wills or consider lifetime gifting in time.
Protecting your family’s wealth is important and our specialist team can help assess how the new APR and BPR limits will affect you.
Taking early action is important to giving you the best chance of reducing inheritance tax and preserving your assets.
If you require advice on how to pass your estate on as efficiently as possible, contact our Wills and probate team.
