Back in October 2024, the UK government dropped a bombshell in the Autumn Budget: sweeping reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) were on the horizon. Fast forward to July 2025, and we now have the draft legislation in hand.
Despite strong pushback from rural and business groups, the government has largely stuck to its guns.
The £1 Million “100% Relief” allowance on qualifying APR/BPR assets remains and the value of any qualifying assets more than that limit will only get 50% relief. This applies to both lifetime transfers and on death.
The allowance will refresh every seven years after a lifetime transfer, so there’s a clear incentive to start any inheritance tax (IHT) planning sooner rather than later.
Trusts get their own £1 million cap and will also benefit from an allowance of £1 million for 100% relief. Again, anything above that gets 50%. The rules around trusts are complex and depend on when the trust was created and we would recommend you seek professional advice.
The £1 million allowance is not transferable between spouses or civil partners. Therefore, the first planning point for any couple who own more than £1 million of qualifying assets will be to ensure that both spouses/civil partners are utilising their allowance, effectively sheltering £2 million of assets from IHT.
A small win is that the £1 million cap may increase in line with inflation from April 2030. It’s not guaranteed, but it’s in the draft.
Broadly speaking, the draft legislation closely reflects what the Chancellor announced last October, despite hopes for a more lenient approach. While some may find reassurance in having the draft rules to guide their IHT planning, the timing raises questions. With the Autumn Budget scheduled for 26 November, many are wondering whether further changes could still be on the horizon.