A welcome update for succession planning
The UK government has announced an increase to the IHT relief cap, bringing important changes for families, farmers, and business owners who rely on Agricultural Property Relief (APR) and Business Property Relief (BPR). This update is designed to provide greater certainty and protection for those passing on family assets, particularly in the face of rising land and business values. For many, this change could significantly reduce future inheritance tax exposure.
Understanding APR and BPR
APR and BPR are long-standing inheritance tax reliefs that allow qualifying agricultural property and business assets to be passed on either free from IHT or at a reduced rate. These reliefs play a crucial role in enabling family farms and trading businesses to continue across generations without being forced to sell assets to pay tax bills. The increase in the IHT relief cap reflects the government’s recognition that existing limits no longer kept pace with real-world asset values.
What has changed with the IHT relief cap
Under the new measures, the maximum value of assets that can qualify for APR and BPR has been increased. This adjustment means more of a qualifying farm or business can now benefit from IHT relief than before. The change is particularly relevant for landowners and business families who may previously have exceeded the old cap simply due to inflation and long-term growth, rather than any fundamental change in their operations.
Who is likely to benefit most
Farmers, rural landowners, and owners of family-run trading businesses are expected to gain the most from the revised IHT relief cap. Many estates that were previously only partially covered by APR or BPR may now fall fully within the expanded threshold. This provides reassurance to older business owners who are planning succession but were concerned about the potential tax burden on the next generation.
Why the government made this change
The decision follows ongoing concerns raised by professional bodies, including STEP, about the impact of inheritance tax on family businesses and farms. Without changes, increasing asset values could have undermined the purpose of APR and BPR altogether. By increasing the IHT relief cap, the government aims to support economic stability, protect jobs, and encourage long-term investment in UK businesses and agriculture.
The importance of careful planning
While the increase is positive news, APR and BPR remain complex reliefs with strict qualifying conditions. Ownership periods, business activities, and asset usage all affect eligibility. Relying solely on the higher IHT relief cap without proper advice could still leave families exposed to unexpected tax bills. This is where early planning and professional guidance become essential.
How Care Accountancy can help
At Care Accountancy, we work closely with business owners, farmers, and families to structure assets in a tax-efficient way. We help clients review eligibility for APR and BPR, plan succession strategies, and ensure compliance with HMRC rules. Our proactive approach means you can make the most of available reliefs while protecting your family’s long-term interests. You can learn more about our tax planning services here.
Final thoughts on the IHT relief cap
The increase in the IHT relief cap for APR and BPR is a positive step that offers much-needed relief for many UK families and businesses. However, reliefs should never be taken for granted. With values continuing to rise and tax rules evolving, now is the right time to review your inheritance tax planning and seek expert advice to secure your legacy.
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