Tax clarity brings opportunity: Why business owners should act now

The UK Government has published its official response to the consultation on proposed reforms to Inheritance Tax reliefs, namely Agricultural Property Relief (APR) and Business Property Relief (BPR), originally announced in the Autumn Budget on 30 October 2024. Alongside this, draft legislation was released, confirming the rules that will take effect from 6 April 2026.

While many stakeholders, including Kreston Reeves, submitted detailed responses advocating for changes, the Government has opted to proceed largely as originally proposed. This includes the introduction of a £1 million cap on 100% relief for qualifying APR and BPR assets, with any value above this threshold receiving only 50% relief. AIM-listed shares will not benefit from the £1 million cap, instead receiving 50% relief regardless of value.

Most disappointing is any unused allowance will not be transferrable between spouses or civil partners on death.

What do the changes in IHT legislation mean for you

Although none of the suggested amendments were adopted, confirmation of the position shown in the draft legislative removes a layer of uncertainty that has loomed over those affected. With the rules now clear, there is a valuable window of opportunity to take proactive steps in estate and succession planning.

This is particularly relevant for:

• Owners of agricultural assets aiming to secure APR for land and property passed through generations.
• Family business owners considering the succession strategy through lifetime gifting.
• Advisers and trustees who need clarity on the longer-term benefits of continuing to hold qualifying assets in trust.

Now is the time to act

We recommend the following actions:

• Review your succession plans to ensure they align with the confirmed reliefs and thresholds.
• Assess the use of trusts in your estate planning and how the reliefs will apply.
• Engage with your advisers to explore whether your current arrangements remain optimal under the new rules.

As highlighted in our recent article, the future of family businesses depends on timely and informed planning. The clarity provided by this consultation outcome is a valuable opportunity to do just that.

The Government’s decision to proceed without changes offers stability in an area that has seen much speculation. This is the moment to act—while the rules are clear and the reliefs remain available.  You can read the full consultation outcome on the UK Government website.

If you are concerned about how these changes may affect your business or estate, we strongly encourage you to seek advice as soon as possible. Please do not hesitate to get in touch with a member of our expert team.