From 6 April 2026, important changes to Inheritance Tax (IHT) reliefs come into effect for family businesses and farms. The government has reformed Business Property Relief (BPR) and Agricultural Property Relief (APR) to limit full 100% relief.

Previously, qualifying business and agricultural assets passed on death or certain gifts were fully exempt from IHT, no matter the value. Now, a £2.5 million allowance applies per person for the combined value of assets qualifying for 100% BPR or APR. Anything above that gets only 50% relief, leading to an effective 20% IHT rate on the excess.

This follows announcements in the 2024 Autumn Budget, with the threshold raised from an initial £1 million to £2.5 million in December 2025. For couples, the transferable allowance means up to £5 million of qualifying assets can pass tax-free (plus standard nil-rate bands), on top of other exemptions.

The aim is to target relief at smaller and medium-sized family enterprises while raising revenue from the largest estates. Many family businesses remain unaffected, but those with higher values now face potential liabilities that could force sales or restructuring.

With the changes just weeks away, planning matters more than ever. Here are key ways to protect your family business.

Assess Your Current Position

Start by valuing your qualifying assets. This includes shares in unquoted trading companies (or certain AIM shares, though relief drops to 50% for some unquoted designations), business property, and agricultural land or buildings that meet the rules.

Combine BPR and APR values to see where you sit against the £2.5 million cap. Factor in the nil-rate band (£325,000) and residence nil-rate band (up to £175,000) for a full picture.

Get professional valuations early, as accurate figures help with decisions.

Consider Lifetime Gifting and Succession Planning

Gifting shares or assets now can reduce your estate, but watch anti-forestalling rules. Gifts made from 30 October 2024 onward, where the donor dies after 5 April 2026 within seven years, may only get 50% relief if qualifying.

Structured succession, like gradual transfers to family members or trusts, can spread value and use allowances over time. Trusts may still offer protection, though rules have tightened.

Discuss with family to ensure successors are ready and the business stays intact.

Use Life Insurance and Funding Options

IHT on excess assets can be paid in instalments over 10 years interest-free for qualifying business and agricultural property. This eases cash flow without selling core assets.

Life insurance policies written in trust can cover potential bills, providing liquidity for heirs.

Pension planning remains useful, as certain death benefits may fall outside the estate.

Review Company Structure and Ownership

For limited companies, ensure shares qualify for relief by maintaining trading status. Diversify if needed, but avoid actions that jeopardise qualification.

Monitor company filings and status to support ongoing compliance.

Quick access to Companies House records helps verify details, track changes, or prepare for transfers.

The Companies House on the Go app offers simple searches for company info, accounts, confirmation statements, and updates from your phone.

Download for iOS: https://apps.apple.com/us/app/uk-companies-house-on-the-go/id6743302358

Or Android: https://play.google.com/store/apps/details?id=com.companiesonthe.go

For additional support on company management, check out Companies on the Go.

Seek Specialist Advice Promptly

An accountant, tax adviser, or solicitor experienced in family businesses can model scenarios, review relief eligibility, and suggest tailored steps.

With deadlines approaching, early action avoids rushed decisions or missed opportunities.