Recent changes to inheritance tax (IHT) are set to significantly reshape estate planning \u2014 particularly for farmers, rural business owners, and landowners.<\/p>\n
Traditionally, Agricultural Property Relief (APR) and Business Property Relief (BPR) have provided essential tax benefits, allowing land and business assets to be passed down with minimal IHT liability. However, upcoming reforms will reduce the generosity of these reliefs and add complexity to succession planning.<\/p>\n
Here\u2019s a closer look at what\u2019s changing, how rural estates might be affected, and what steps landowners should consider now.<\/p>\n
Key changes to be aware of:<\/strong><\/p>\n What this means for rural estates<\/strong><\/p>\n These reforms may lead to:<\/p>\n\n
\n<\/strong>From April 2026, both APR and BPR will be capped. The first \u00a31 million of qualifying agricultural or business assets will still receive 100% relief. Beyond that, relief will reduce to 50%, creating an effective 20% IHT liability on the excess. Given rising land values, many estates are likely to exceed this \u00a31 million threshold, making this a critical consideration for rural landowners.<\/li>\n
\n<\/strong>Currently, AIM-listed shares qualify for 100% BPR. Under the new rules, this will be halved to 50%, affecting individuals who use AIM investments as part of a tax-efficient succession strategy.<\/li>\n
\n<\/strong>From April 2027, undrawn pension funds and death benefits will be included in the value of a deceased person\u2019s estate for IHT purposes. For estates that include land, property, and pension wealth, this could result in a notable increase in tax liability.<\/li>\n<\/ol>\n