AUTUMN BUDGET 2024 - Inheritance Tax - Changes to Agricultural Relief (APR) and Business Property Relief (BPR)

With effect from 6 April 2026, an individual will have a £1 million allowance within which they can transfer property which currently qualifies for APR or BPR at a rate of 100%. Broadly, the 100% rate of relief will continue to be available to apply against qualifying property up to a value of £1 million.

Where the value of the qualifying property exceeds this threshold, the rate of relief applicable to the balance will be 50%. Additionally, the government’s policy paper suggests that the allowance will be apportioned across the qualifying property in those circumstances.

There will be no restriction on an individual’s ability to transfer property which currently qualifies for relief at 50%.

The new rules will apply when considering the inheritance tax due on an individual’s estate where their date of death is on or after 6 April 2026.

The government’s policy document explicitly states that anti-forestalling rules will apply to "lifetime transfers made on or after 30 October 2024 if the donor dies on or after April 2026”. Broadly, this means that the new rules will apply where an inheritance tax charge is being considered on the death of an individual on after 6 April 2026 and the original lifetime transfer took place on or after 30 October 2024.

The government’s policy document confirms that an individual’s unused allowance will not be transferable.

The rate of BPR which applies to shares that are not listed in the markets of recognised stock exchanges, such as the AIM, will be reduced from 100% to 50% with effect from 6 April 2026.

Trustees

For trustees holding APR/BPR qualifying assets under the relevant property regime, the government have confirmed that a ‘combined’ £1 million allowance will be available to allocate against qualifying property on each ten-year anniversary and exit charge.

Where a settlor has settled more than one trust comprising APR/BPR applicable property prior to 30 October 2024, each trust will have its own £1 million allowance for 100% relief. For trusts settled after this date, anti-forestalling rules will be introduced to ensure that the allowance is divided among multiple trusts that are settled by the same individual.