A Seismic Shift in Inheritance Tax Has Already Happened
On the 6th of April 2026, the rules governing two of the most widely used inheritance tax (IHT) reliefs changed in ways that will affect thousands of your clients. Business Property Relief (BPR) and Agricultural Property Relief (APR) have underpinned succession planning for business owners and farmers for decades. From this tax year, those reliefs are capped, and the implications are significant.
For UK accounting firms, this is not a future concern to monitor. It is an active advisory challenge, right now, for any client who owns a business, holds agricultural land, or has structured their estate around the assumption of full IHT relief. If you have not already reviewed your client base through this lens, this post is the place to start.
What Has Changed and What It Means
Under the old rules, qualifying business and agricultural assets attracted either 100% or 50% BPR or APR, with no upper limit on the value that could be sheltered. A business worth £10 million could, in principle, pass to the next generation entirely free of IHT, provided the qualifying conditions were met.
From April 6th 2026, that is no longer the case. The key changes are:
- A combined £2.5 million allowance applies to the total value of assets qualifying for 100% BPR and APR per individual. Assets within this threshold continue to attract full relief.
- Assets above £2.5 million are limited to 50% relief, creating an effective IHT rate of 20% on the excess (since the standard 40% IHT rate applies to half the value).
- Married couples and civil partners each have their own £2.5 million allowance, giving a combined shelter of £5 million where assets are structured appropriately.
- The allowance refreshes every seven years for individuals, mirroring the logic of the nil rate band. For trusts subject to IHT, the refresh period is ten years.
- AIM-listed shares, which previously attracted 100% BPR, are now restricted to 50% relief regardless of value, removing a popular IHT planning strategy.
- The instalment option for paying IHT on qualifying business and agricultural assets has been made interest-free over ten years, which is a partial concession for asset-rich, cash-poor estates.
The government estimates that around 1,100 estates per year will pay more IHT as a direct result of these changes. While that number may appear modest in isolation, the affected estates are typically those of your most valuable and complex clients: owner-managed business proprietors, farming families, and individuals with significant illiquid holdings.
Why This Creates an Urgent Advisory Opportunity
The changes to BPR and APR have been described by leading advisers as the most seismic change to business owner succession planning for a generation. For clients who built estate plans on the basis of unlimited relief, the financial exposure can be substantial.
Consider a business owner whose trading company is valued at £6 million. Under the old rules, the entire value would pass free of IHT using BPR. Under the new rules, the first £2.5 million is sheltered, but the remaining £3.5 million attracts an effective IHT charge of £700,000. That is a very different conversation to have with a client, and it needs to happen now rather than at the point of death or incapacity.
Clients affected by these changes need help with:
- Recalculating their IHT exposure under the new rules, taking into account the £2.5 million allowance and any prior gifts made in the seven years before death.
- Reviewing business structures to consider whether a different share structure, broader family ownership, or a holding company arrangement might reduce the estate's overall IHT liability.
- Exploring trust planning, where appropriate, to move assets outside the estate while retaining some degree of control or benefit, bearing in mind the ten-year periodic charge rules for trusts.
- Assessing life insurance options to ensure that any residual IHT liability can be met without forcing the sale of business assets or agricultural land.
- Planning for illiquidity, since many affected estates hold assets that cannot easily be converted to cash. The interest-free instalment option is useful, but it is not a substitute for proper planning.
Which Clients Should You Prioritise?
Not every client will be affected, but identifying those who are should be a priority for your firm over the coming months. The following client profiles warrant immediate review:
- Business owners with trading companies or partnerships valued above £2.5 million, where succession has not been formally planned.
- Farming clients with agricultural land and property whose combined APR-qualifying assets exceed £2.5 million, particularly those without a surviving spouse to double the allowance.
- Clients who hold AIM-listed shares as part of a deliberate IHT mitigation strategy and have not yet been advised of the reduction from 100% to 50% relief.
- Trustees of discretionary or other IHT-relevant trusts holding business or agricultural property, who now face a £2.5 million cap at each ten-year periodic charge.
- Clients who made gifts of business or agricultural assets in the seven years before 6 April 2026, since those gifts will count against the new allowance.
A Practical Framework for Your Firm
The most effective response to these changes is systematic rather than reactive. Here is a practical approach for reviewing your client base and delivering timely advice:
- Segment your client database by business ownership, agricultural interests, and known estate values. Many firms will find that a relatively small number of clients account for the majority of the advisory exposure.
- Write to affected clients proactively. A short, plain-English letter or email explaining the changes and inviting them to book a review meeting demonstrates the kind of proactive value that retains clients and generates referrals.
- Prepare a standard IHT review template that captures the key data points: total BPR and APR-qualifying assets, prior gifts in the last seven years, existence of trusts, liquidity position, and family structure.
- Collaborate with solicitors and financial planners. The most complex succession planning cases will require a multi-disciplinary approach. Building referral relationships with estate planning solicitors and independent financial advisers will allow you to deliver a more complete service.
- Document your advice carefully. Given the size of the potential IHT liabilities at stake, thorough file notes and engagement letters are essential for professional indemnity purposes.
A Word on Timing
One of the most common mistakes in estate planning is treating it as something that can always be deferred. The seven-year clock on potentially exempt transfers means that every year of inaction is a year of planning opportunity lost. Clients who restructure their affairs today begin the clock running immediately. Those who wait may find that their options are more limited, or that the cost of planning has increased.
The changes to BPR and APR have already taken effect. The window for pre-April 2026 planning has closed. But the window for post-April planning is wide open, and clients who act now will be better positioned than those who do not.
How TaxCalc Supports Your Advisory Work
Delivering high-quality IHT and succession planning advice requires accurate, up-to-date tax calculations. TaxCalc's software is built to support UK accounting firms through exactly this kind of complex, multi-year planning work, with tools that help you model scenarios, prepare accurate returns, and manage the compliance obligations that sit alongside advisory engagements.
Whether you are reviewing a single client's estate position or rolling out a firm-wide IHT review programme, get in touch with TaxCalc today to find out how our software can support your practice.
