Government Waters Down Limitations on Inheritance Tax Relief for Business Owners and Farmers

In the Budget of 30 October 2024 the Government announced plans to limit full Business Property Relief and Agricultural Property Relief to a combined £1m per person with the remaining value of such farmland and business assets being subject to 50% relief (i.e. a 20%) inheritance tax charge. The changes are due to come into law from 6 April 2026 but with some anti-forestalling measures which could apply to transactions before that date.

The proposals have been incredibly unpopular and have gained significant press coverage, particularly from farmers.

In the Autumn Budget of 26 November 2025, they announced that the £1m limit would be transferrable between spouses in a similar way to the nil rate band and the main residence nil rate band. Whilst this was welcome, there was still a feeling that many business owners and farmers would be forced to sell or close their businesses or take on significant debt in order to pass the business to the next generation.

On 23 December, the Government announced that the limit would be increased to £2.5m per person, being £5m per married couple. Again, this announcement is welcome, albeit it will not help every farm and business survive the cost. Planning to make the most of the available reliefs and exemptions will still remain an important for mitigating inheritance tax.

If you would like help planning for inheritance, whether it be related to your business and agricultural assets, or your wider estate please do not hesitate to contact us.