Helping you prosper
In late December 2025, after substantial criticism and public protest, Chancellor Rachel Reeves announced a significant revision to the UK government’s proposed reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR). These two reliefs are cornerstone inheritance tax (IHT) exemptions relied upon by family farms and owner-managed businesses across the UK.
Original APR and BPR proposals raised serious concerns
Under proposals set out earlier in 2025, the government intended to cap the value of assets qualifying for 100% APR and BPR at £1 million per individual from April 2026. Any value above this threshold would have attracted only 50% relief, resulting in an effective 20% IHT charge.
This has raised serious concern across the agricultural and business communities about affordability, cash flow pressures and the risk of forced asset sales on death.
A welcome change
Following sustained lobbying (mainly by farmers) and widespread concern, December’s announcement confirmed a welcome change of direction. The government proposal increased the 100% relief cap to £2.5 million per individual, allowing up to £5 million for married couples and civil partners where reliefs are combined.
This adjustment is expected to protect a far greater number of family farms and trading businesses from immediate IHT exposure, while still restricting relief for estates valued above £5 million. Many viable farms are asset-rich but cash-poor, and long-term family ownership has seen land values rise significantly over time, without a corresponding increase in profits or liquidity to fund IHT liabilities.
For many families, the announcement provides reassurance and greater certainty for succession planning. It also reinforces the government’s intention to preserve APR and BPR for genuinely productive, long-term businesses rather than passive investment structures.
Relief still depends on qualifying assets
However, a word of caution remains essential.
APR and BPR only apply to qualifying assets, and problems can still arise where an estate includes non-trading or non-farming elements. For example, surplus cash, investment portfolios, let property, diversified activities or farmhouses that do not meet occupation and character tests may fall outside the reliefs.
Even where headline asset values sit comfortably within the new £2.5 million threshold, mixed-use estates can still face unexpected IHT liabilities. Forward planning is therefore essential. Remember that it is only the agricultural value that qualified for APR, and not any uplift for hope value or for alternative use.
As a result, careful review of asset structures, trading status and ownership arrangements remains critical. While the increased exemptions are undoubtedly positive, professional advice and proactive planning will continue to be key to ensuring families maximise the benefit of APR and BPR under the revised regime.
Where the Finance Bill now stands
These changes form part of the UK Finance Bill (No.2) 2024–26, the draft of which was published on 4 December 2025 and is currently at committee stage. The original draft retained the £1 million cap, but the government press release on 23 December was followed by an amendment increasing the limits to £2.5 million and confirming the transferability of relief between spouses.
This amendment was being discussed in the House on 12-13 January 2026. Whilst there has been no further comment published, this part of the Bill is unlikely to change significantly before it is passed. For farmers and business owners, it marks a slightly brighter start to the new year than previously expected.
The next step
For any questions regarding the above, please get in touch with the author of this insight, Peter Tuffin, on p.tuffin@uhy-uk.com. Alternatively, please contact your usual UHY probate adviser.
