{"id":28701,"date":"2025-05-13T09:33:18","date_gmt":"2025-05-13T08:33:18","guid":{"rendered":"https:\/\/smh.group\/?p=28701"},"modified":"2025-05-21T09:44:38","modified_gmt":"2025-05-21T08:44:38","slug":"how-the-1-million-iht-business-and-agricultural-relief-allowance-will-work","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/how-the-1-million-iht-business-and-agricultural-relief-allowance-will-work\/","title":{"rendered":"How the \u00a31 Million IHT business and agricultural relief allowance will work"},"content":{"rendered":"<p><strong>HMRC&#8217;s recently closed consultation provides additional clarity on the \u00a31 million inheritance tax (IHT) relief allowance for business and agricultural property, effective from 6 April 2026.<\/strong><\/p>\n<p>The total value of business and agricultural property eligible for 100% inheritance tax relief will be limited to \u00a31 million. Any qualifying assets above this limit will receive relief at a reduced rate of 50%.<\/p>\n<p>For an entrepreneur with a business valued at, for example, \u00a35 million, the new relief threshold could result in an additional IHT liability of \u00a3800,000.<\/p>\n<p><strong>The relief<\/strong><\/p>\n<p>The \u00a31 million allowance will be used up by any lifetime transfers of business and agricultural property made within seven years of death. So:<\/p>\n<ul>\n<li>The allowance will be renewed every seven years on a rolling basis in a similar way to the nil rate band of \u00a3325,000.<\/li>\n<li>Business and agricultural property that only qualifies for 50% relief, such as Alternative Investment Market shares, will not use up the \u00a31 million allowance.<\/li>\n<\/ul>\n<p>Although spouses and civil partners will each qualify for their own \u00a31 million allowance, any unused allowance will not be transferable in the same way as the nil rate band.<\/p>\n<p><strong>Planning<\/strong><\/p>\n<p>Currently, with unrestricted 100% business and agricultural relief, IHT planning primarily concerns ensuring relief is available.<\/p>\n<ul>\n<li>In future, there will be more incentives to make lifetime gifts where the \u00a31 million allowance is insufficient to cover the value of business and agricultural property. This, of course, has implications for capital gains tax that must be considered.<\/li>\n<li>It may be worthwhile to put a fairly substantial gift into trust. For example, the lifetime IHT payable on a \u00a32 million gift of agricultural property into trust would be \u00a335,000<\/li>\n<\/ul>\n<p>If making a lifetime transfer of business or agricultural property to a spouse or civil partner, you must be aware that the property should be held for two years before relief will be available.<\/p>\n<p>Annex A of HMRC\u2019s consultation has six case studies which illustrate how the \u00a31 million allowance will be applied. The consultation can be found <a href=\"https:\/\/www.gov.uk\/government\/consultations\/reforms-to-inheritance-tax-reliefs-consultation-on-property-settled-into-trust\/reforms-to-inheritance-tax-agricultural-property-relief-and-business-property-relief-application-in-relation-to-trusts#annex-a-case-studies\">here<\/a>.<\/p>\n<p><strong>For more information,\u00a0<\/strong><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/contact\/\"><strong>contact us<\/strong><\/a><strong>\u00a0on\u00a00114 266 4432\u00a0or email\u00a0<\/strong><a href=\"mailto:info@smh.group\"><strong>info@smh.group.<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>HMRC&#8217;s recently closed consultation provides additional clarity on the \u00a31 million inheritance tax (IHT) relief allowance for business and agricultural property, effective from 6 April 2026. The total value of business and agricultural property eligible for 100% inheritance tax relief will be limited to \u00a31 million. Any qualifying assets above this limit will receive relief at a reduced rate of 50%. For an entrepreneur with a business valued at, for example, \u00a35 million, the new relief threshold could result in an additional IHT liability of \u00a3800,000. The relief The \u00a31 million allowance will be used up by any lifetime transfers of business and agricultural property made within seven years of death. So: The allowance will be renewed every seven years on a rolling basis in a similar way to the nil rate band of \u00a3325,000. Business and agricultural property that only qualifies for 50% relief, such as Alternative Investment Market shares, will not use up the \u00a31 million allowance. Although spouses and civil partners will each qualify for their own \u00a31 million allowance, any unused allowance will not be transferable in the same way as the nil rate band. Planning Currently, with unrestricted 100% business and agricultural relief, IHT planning [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":28688,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3,16],"tags":[12,13,1403],"class_list":["post-28701","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","category-financial-services","tag-iht","tag-inheritance-tax","tag-inheritance-tax-relief"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How the \u00a31 Million IHT business and agricultural relief allowance will work - SMH Group<\/title>\n<meta name=\"description\" content=\"Inheritance tax relief rules are changing in April 2026, limiting 100% relief on business and agricultural property to \u00a31 million.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How the \u00a31 Million IHT business and agricultural relief allowance will work - 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