Inheritance Tax (IHT) can be complex, especially in light of shifting policy announcements and the planned 2027 reforms affecting the treatment of unused pension savings.
While recent changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will be welcome for many, they do not remove the need for careful succession and estate planning – especially as many asset values continue to rise. Reliefs should not be taken for granted, and families and business owners are encouraged to review their plans well ahead of the April 2026 changes.
Effective planning can help protect family assets and safeguard wealth for the future. As everyone’s circumstances are different, seeking professional advice ensures that the most appropriate reliefs are used and potential IHT liabilities are minimised.
What is changing?
Agricultural Property Relief and Business Property Relief
Inheritance Tax rules have remained largely unchanged for several years. The Autumn Budget 2024 confirmed that the nil-rate band will remain frozen at £325,000 until 2030, and the seven-year rule for lifetime gifts continues to apply.
By contrast, Agricultural Property Relief (APR) and Business Property Relief (BPR) have seen notable changes over the past year. Reforms announced in the Autumn Budget 2024 introduced a £1 million cap on assets qualifying for 100% relief. Following industry concern, these measures were subsequently revised by the government in late 2025.
From 6 April 2026, the threshold for 100% APR and BPR will increase from £1 million to £2.5 million per estate.
This means:
- Individuals will be able to pass on up to £2.5 million of qualifying agricultural or business assets with full inheritance tax relief;
- 50% relief will continue to apply to qualifying assets above this threshold; and
- These reliefs are available in addition to existing inheritance tax allowances, such as the nil-rate band and residence nil-rate band.
Unused pension funds and death benefits
From 6 April 2027, most unused pension funds and pension death benefits will be included within a person’s estate for Inheritance Tax (IHT) purposes. Personal Representatives will be responsible for reporting and paying any IHT due on these amounts. This represents a significant change in how pensions are treated for estate planning.
Certain benefits are excluded from these rules, including death-in-service benefits from registered pension schemes, and dependant’s pensions from defined benefit or collective money purchase arrangements.
As a result, estates containing inheritable pension wealth may face higher IHT liabilities from April 2027.
How M+A Partners can help
Tax laws are subject to change and it is helpful to keep informed with the current regulations and IHT planning tools. You may wish to consider succession planning, making lifetime gifts and the use of trusts – we help you to think through the full tax implications of reliefs before taking any action.
Having an up-to-date will is another important part of estate and inheritance planning. When a person dies without leaving a will, their estate is shared out according to certain rules – these are called the ‘rules of intestacy’.
Do contact us if you wish to discuss your Inheritance Tax exposure as well as ways to reduce this, where possible, by lifetime planning.
Find out more about how we can help with your unique Inheritance Tax and later life planning needs by getting in touch with the team at attleborough@mapartners.co.uk or call 01953 452077
