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The major changes to inheritance tax announced in the Autumn 2024 Budget will go ahead as planned in 2026, according to new draft legislation
24 July 2025
Major changes to inheritance tax announced in the October 2024 Budget will go ahead as planned in 2026, according to new draft legislation and subject to confirmation in the Autumn 2025 Budget.
From 6 April 2026, business and agricultural assets will qualify for only a £1m allowance of 100% relief and any value in excess of this will be subject to a reduced rate 50% relief.
The Government released the draft legislation for the changes to business property relief (BPR) and agricultural property relief (APR) on 22nd July.
This follows on from the major announcements made in the 30 October 2024 Autumn Budget and the Governments two-month consultation that was released on 27th February.
The headline is that the draft legislation will, if enacted into law, introduce all of the changes as announced by Rachel Reeves back in October 2024, despite significant lobbying since October.
See our earlier article: Inheritance tax changes ahead: time to plan now
It had been hoped that, even if the rules were to be introduced, that there may be some adjustments and concessions – for example enabling spouses to transfer any unused £1m allowance on death.
However, it is confirmed that the £1m allowance will not be transferrable.
The draft legislation will likely be passed into law in Finance Act in early 2026. So, it is wise to plan now on the assumption these rules will come into force, given the Government's reaffirmed commitment and majority in Parliament.
We would expect further detailed guidance from HMRC on the application of the legislation next year.
The proposed inheritance tax changes are very significant and are forcing individuals and families to reassess their succession plans.
Taking steps to reduce the impact of these changes may have consequent implications for your tax liability, your family and commercial matters, so it is important to work with your advisors on the best options available.
If you would like to discuss how these forthcoming changes could impact you and your business, please contact your usual Bishop Fleming advisor, or a member of our Tax Team.
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