Most of these reforms took effect on 6 April 2026.
Summary
Major UK inheritance tax (IHT) changes came into force on 6 April 2026. These reforms mainly affect business owners, farmers, family companies, trusts, and investors with AIM shares.
The biggest change is that Business Property Relief (BPR) and Agricultural Property Relief (APR) are no longer unlimited. New caps now apply, and some estates may face larger tax bills than expected.
If you own a business, farmland, trading company shares, or use trusts for succession planning, now is the time to review your estate plan.
Main Points
- New £2.5 million cap per person for 100% APR and BPR relief.
- Married couples and civil partners may pass up to £5 million in qualifying assets tax-free.
- Value above the cap now gets 50% relief, creating an effective 20% IHT charge.
- AIM shares no longer receive full relief and may face 20% IHT.
- New trust rules limit how allowances can be used.
- Standard IHT thresholds remain frozen until April 2031.
- Early planning can reduce tax exposure and protect family wealth.
Big Inheritance Tax Changes for Businesses and Farms
From 6 April 2026, unlimited inheritance tax relief for qualifying business and agricultural assets has ended.
Previously, many family businesses and farms could pass to the next generation with 100% relief from IHT. Now, that full relief is capped.7
What Is the New Cap?
Each individual now has a £2.5 million allowance for qualifying APR and BPR assets.
This means:
- Up to £2.5 million may still receive 100% relief
- Anything above that may receive only 50% relief
- The excess could face an effective 20% inheritance tax charge
Can Couples Use Both Allowances?
Yes. Unused allowances can usually transfer between spouses or civil partners. This means a couple may be able to pass up to £5 million of qualifying business or farm assets free from inheritance tax.
AIM Share Investors Hit by New Rules
Many investors used Alternative Investment Market (AIM) shares for inheritance tax planning.
From April 2026, AIM holdings no longer receive automatic 100% relief. Instead, many now only qualify for 50% relief, meaning an effective 20% IHT rate may apply on death.
If you hold AIM investments for estate planning, a review is strongly recommended.
New Trust Rules in 2026
Trusts holding qualifying business or agricultural property now face tighter rules.
Key Changes Include:
- A £2.5 million trust allowance for 100% relief
- New anti-fragmentation rules to stop multiple trusts being used to multiply allowances
- Older trusts may benefit from transitional protections in some cases
Families using trusts for succession planning should seek advice urgently.
Inheritance Tax Thresholds Frozen Until 2031
The government has confirmed the standard thresholds remain frozen until April 2031:
- Nil-Rate Band: £325,000
- Residence Nil-Rate Band: £175,000
As property and asset values rise, more families may be pulled into inheritance tax.
Other Important Changes
10-Year Instalments
More estates may now be able to pay inheritance tax over 10 annual instalments without interest for qualifying APR/BPR property.
Infected Blood Compensation
Compensation payments under the scheme now benefit from full IHT relief.
Making Tax Digital
Although not an inheritance tax rule, Making Tax Digital began in phases from April 2026 for some landlords and sole traders, which may affect record keeping and succession planning.
Why This Matters
Many families assumed business assets, farms, or AIM shares would pass tax-efficiently. That may no longer be the case.
Without planning, heirs may need to sell assets, borrow funds, or restructure ownership to pay inheritance tax.
How GLP Solicitors Can Help
We help business owners, farming families, investors and individuals plan for inheritance tax with practical legal advice.
We can assist with:
- Estate and succession planning
- Wills and trusts
- Business ownership restructuring
- Family farm succession plans
- Reviewing AIM and investment strategies
- Protecting wealth for future generations
FAQs
There is now a £2.5 million allowance per person for 100% relief on qualifying assets.
Usually yes. A couple may be able to pass up to £5 million in qualifying assets tax-free.
They can, but the rules are more restrictive and should be reviewed carefully.
Yes. If you own a business, farmland, AIM shares, or significant assets, professional advice is strongly recommended.