Government plans to restrict 100% IHT relief on business and agricultural property, which were announced in last year’s Budget have been amended.

In October 2024, it was announced that IHT would be imposed on inherited agricultural and business assets worth more than £1 million from April 2026, with relief of only 50% available on any value above that cap.

Following a huge backlash, particularly in the farming sector, the tax-free limit has been increased from £1 million to £2.5 million. This will definitely apply to agricultural businesses but there is some uncertainty about the relief for other businesses.

This follows the government’s recent announcement that the combined 100% relief allowance would be transferable between spouses. Initially, the relief was not going to be transferable.

Whilst this will still be problematic for some farm and business owners, many small farmers and business owners will find that their agricultural and business assets will now drop out of charge to IHT.

However, this is still a complex relief, particularly for those wishing to make lifetime gifts or to mitigate their exposure to IHT by transferring assets into trust, so if you think this might affect you, please contact us  so that we can advise you on how this legislation will apply to your specific circumstances.