Understand your IHT exposure

Major IHT reforms will reduce long-standing reliefs for business owners, farmers, trustees and families.

There is still time to act, but the window is narrowing. Taking steps now will help you secure the reliefs that are being significantly reduced in 2026 and 2027.

Read more about the changes below, download our guide, or book a meeting with us.

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Inheritance Tax rules are changing

Starting April 2026, key reliefs are tightening significantly and from April 2027, pensions are being brought into scope for IHT for the first time.

Act before the rules change

Business Property Relief (BPR) & Agricultural Property Relief (APR) Reductions (from April 2026) 

Business Property Relief and Agricultural Property Relief has long been a cornerstone of IHT planning, often giving 100% relief on qualifying business and farm assets, with no limit on values.

From April 2026:

  • Business and agricultural assets will qualify for a £1m allowance of 100% relief  
  • Any value above £1m will only qualify for 50% relief, resulting in a 20% tax charge (40% IHT × 50%) on the excess.  These limits apply per individual.  
  • This new £1m allowance will be effectively frozen for the next 5 years, reducing their effectiveness over time as asset and estate values rise. 
  • Certain assets previously eligible for full relief may now qualify for reduced or no relief at all.
  • Trusts will have limitations for BPR and APR and the utilisation of the £1m allowance.  
For business owners expecting their company to pass tax-efficiently to the next generation, reviewing your IHT exposure is critical.

The Bigger Picture: Business Exit, IHT Impact, and Succession Strategy

If you’re considering selling your business in the next 3-5 years, you need to consider the impact of this on Inheritance tax planning. 

Key questions that are often asked:

  • What is going to be my IHT exposure post-sale?
  • How to structure the business now to maintain the most tax efficient exit – considering capital gains and IHT aspects?
  • Where do the opportunities lie to get assets out of my estate, but retain control and ongoing income? 
It’s time to consider what are the best and most effective inheritance tax mitigation strategies for shareholders in owner-managed businesses, particularly in the event of a future exit or sale.

Trusts and Business/Farm Property Relief (Changes from April 2026)

Long-standing reliefs used to protect family businesses and farms from Inheritance Tax are being tightened. The government is introducing limitations on:

  • Trust-held business and farm assets
  • Multiple claims across structures
  • Relief availability based on asset type and ownership

If you rely on trusts, family structures, or shared ownership of business or farm assets, these changes could dramatically affect your estate.

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Business Property Relief (BPR) Tightening + Relief Freeze (from April 2026)

Business Property Relief has long been a cornerstone of IHT planning, often giving 100% relief on qualifying business assets.

From April 2026:

  • Relief rules will be tightened, restricting qualifying assets.
  • Relief levels will be effectively frozen, reducing their value over time as asset prices rise.
  • Certain assets previously eligible for full relief may now qualify for reduced or no relief at all.
For business owners expecting their company to pass tax-efficiently to the next generation, this creates a time-sensitive planning window.

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Pensions Brought Into Inheritance Tax (from April 2027)

One of the biggest shifts in IHT for decades with the following brought fully into the IHT net:

  • Unused pension funds and
  • Death benefits from registered pension schemes

This is a fundamental change. Previously, pensions were typically excluded from your estate. From 2027, this may no longer be the case and many families will face unexpected IHT bills as a result.

Who Is Most at Risk?

Business owners

Those relying on BPR to pass down shares tax-efficiently.

Farm owners

Those with valuable agricultural land and buildings in their estate.

High net worth families

Anyone using trusts for succession, protection, or wealth planning.

Individuals with large pension pots

Anyone with significant pension savings will need to review their succession planning.

Estates

Estates that previously sat just below IHT thresholds but will now be pushed above.

Schedule your estate review

The cost of doing nothing

Large, unexpected IHT bills

Forced sale of business shares, farmland, or commercial assets

Loss of generational wealth that could have been protected

Trustees facing additional reporting, liability, and tax exposure

Pensions unintentionally dragging an estate into the 40% IHT zone

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