Upcoming Tax Changes for Businesses and Farmers

The upcoming changes to the tax rules around Agricultural Property Relief (APR) and Business Property Relief (BPR) following last year’s Budget, are likely to majorly affect businesses, companies and farms.

Generational business are particularly vulnerable if no plans are put in place for the future.

Under current legislation, qualifying farms can apply for 100% APR and qualifying businesses and investments can apply for 100% BPR.

From 6 April 2026, APR and BPR rules will change as follows:-

• APR - the 100% rate of relief will continue for the first £1 million of combined agricultural and business property, 50% relief thereafter. Each case is considered in proportion where the qualifying property exceeds £1m.
• BPR – this relief is being reduced from 100% to 50% for shares listed on the Alternative Investment Market (where they have been owned for 2 years or more). BPR has been a very efficient tool for inheritance tax planning whereby the 7 year rule is not attractive for various reasons.  This 2 year ownership is not transferrable between spouses on lifetime gifts.

These changes could mean an extensive amount of work is required by business owners and farmers (and their tax advisers) as valuations of those qualifying assets are crucial for the estate planning process.

The dynamic of the business also needs to be considered to ensure that the tax reliefs are being utilised whilst also maintaining the efficiency and longevity of the business.

Lifetime gifts – any lifetime gifts made on or after 30 October 2024 will be subject to the new rules if the person who made the gift dies on or after 6 April 2026.

If you and/or your business are likely to be affected by the upcoming changes, our Teams can assist you with your corporate or estate planning needs.