Government plans to restrict 100% inheritance tax (IHT) relief on business and agricultural property, announced in last year’s Budget, have been amended following substantial industry and public opposition.

What was originally proposed

In October 2024, the government announced that IHT would be imposed on inherited agricultural and business assets worth more than £1 million from April 2026, with only 50% relief available on any value above that cap. The announcement provoked significant backlash, particularly from the farming sector.

What has changed

The tax-free limit has now been raised from £1 million to £2.5 million. This uplift will definitively apply to agricultural businesses, though there remains some uncertainty about the precise scope of relief for other business types.

Separately, the government has confirmed that the combined 100% relief allowance will be transferable between spouses — a concession that was not part of the original announcement.

What this means in practice

Many small farmers and business owners will find that their assets now fall beneath the revised threshold and remain outside the charge to IHT. However, the relief remains complex — particularly for those considering lifetime gifts or the use of trust structures to manage IHT exposure.

If you think these changes may affect your estate or business succession planning, please contact us. The interaction between the revised relief, your specific asset values and any existing arrangements will require careful individual analysis.