Many individuals who previously expected to pass on business or farming interests free from IHT may now face a potential tax liability, following a series of announcements made by the Chancellor over the last couple of years. Understanding the new rules and reviewing your estate planning arrangements has never been more important.

What’s changed with IHT rules?

Since April 2026, the following changes have come into effect:

  • The IHT Relief Cap has been set at £2.5m (an increase from the Chancellor's original proposal of £1m). Farmers and business owners can claim 100% relief on combined Agricultural Property Relief (APR) and Business Property Relief (BPR) up to a value of £2.5m.
  • Qualifying assets with a value above £2.5m will attract a 50% relief, resulting in an effective tax rate of 20%, rather than the main rate of 40%.
  • Unused £2.5m allowances can be transferred to a surviving spouse or civil partner, allowing up to £5m combined relief.
  • Shares listed on the Alternative Investment Market (AIM) are restricted to 50% relief rather than 100%. The £2.5m allowance does not apply to these shares.
  • A dedicated £2.5m 100% APR/BPR allowance applies to qualifying trust assets, with this allowance refreshing every 10 years.
  • The option to pay IHT on business and agricultural assets in interest-free instalments is extended to 10 years.
  • The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen until April 2031.

Future IHT rules to be aware of

There are also further changes on the horizon. From April 2027, unused pension funds and death benefits are expected to form part of an individual's taxable estate, potentially increasing IHT exposure for many families.

How can UHY Peninsula help?

The recent changes mean it is a good time to review your estate planning arrangements and assess whether your current strategy remains effective.

Our experienced tax team can help you:

  • understand how the new APR and BPR rules affect your family, business or farming interests
  • review your current estate planning and identify potential IHT risks
  • assess the impact of future pension changes on your estate
  • explore opportunities to minimise IHT liabilities through appropriate planning
  • consider the use of trusts and other succession planning strategies
  • develop a practical, tax-efficient plan to help protect wealth for future generations.

If you have concerns about how these changes could affect you or would like to take proactive steps to reduce future IHT liabilities, please get in touch on 01566 777189 or email enquiries@uhy-peninsula.com.

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