![\"UK](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/12\/taxationsqueeze.jpg\"\/)
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After the UK government announced that the level of the agricultural and business property reliefs threshold will be increased from \u00a31 million ($1.34 million) to \u00a32.5 million when it is introduced in April 2026, wealth managers react.\t \t \t <\/p>\n
\n The UK government announced yesterday that it has increased the
\n \u00a31 million ($1.34 million) agricultural and business property
\n reliefs threshold to \u00a32.5 million from April 2026 \u2013 allowing
\n spouses or civil partners to pass on up to \u00a35 million in
\n qualifying agricultural or business assets between them.\u00a0
\n<\/p>\n
\n When Chancellor of the Exchequer Rachel Reeves, aka finance
\n minister, decided in the 2024 Autumn Budget that agricultural and
\n business property business relief would be reformed with assets
\n over \u00a31 million facing a 20 per cent rate, it prompted a storm of
\n protests from farmers in particular. A fear has been that
\n family-run firms will be broken up, as cash-poor\/asset-rich
\n owners sell to pay tax bills.
\n<\/p>\n
\n Under Reeves” changes, a\u00a050 per cent relief would have
\n been\u00a0applied in all circumstances on inheritance tax for
\n shares on the Alternative Investment Market (AIM). The change
\n would take effect from April 2026, and it was expected that it
\n would force more land onto the market in order to meet IHT bills.
\n However, with the change announced this week, just prior to the
\n Christmas holiday season, it offers a measure of relief, although
\n uncertainties remain. Here are some reactions\u00a0from wealth
\n managers and accountancy firms.
\n<\/p>\n
\n Marc Acheson, global wealth specialist at Utmost Wealth
\n Solutions
\n \u201cThe government\u2019s adjustment belatedly strikes a more pragmatic
\n balance between protecting generational ownership of farms and
\n other business properties with targeting relief where it\u2019s most
\n needed. The \u00a35 million per couple allowance is generous now for
\n farms and business owners in comparison with\u00a0the looming
\n extension of IHT to pensions on estates in excess of a
\n permanently frozen nil rate band.
\n<\/p>\n
\n \u201cIt will be a welcome Christmas present for many farmers \u2013 as
\n well as business owners given that this will also apply to
\n Business Property Relief \u2013 who have long been fighting the
\n reforms announced at the Autumn 2024 Budget. The question will
\n now move on to whether the government seeks to amend any other
\n inheritance tax reforms. With the Chancellor set to review the
\n impact of the abolition of the non-dom tax status and publish
\n findings next year, it will be interesting to see the real-life
\n impact of this policy in terms of tax returns and receipts.\u201d
\n<\/p>\n
\n Mark Lance, CEO of Moore UK
\n \u201cThe problem with today’s concession is that it may have come too
\n late for many UK businesses and farmers. With businesses subject
\n to IHT for the first time in generations, entrepreneurs\u00a0had
\n been\u00a0passing on their businesses\u00a0before they die in
\n order to\u00a0reduce their IHT bill. It may be too difficult to
\n unwind these transactions. Some of these transactions could
\n backfire, with businesses being passed on to people who are not
\n ready to manage them.
\n<\/p>\n
\n \u201cThere is a serious risk that business owners were forced into
\n these transfers by the changes to IHT to the potential detriment
\n of those businesses going forward. The dramatic changes to the
\n IHT rules mean that successors could be taking over businesses
\n before they are ready to take on the responsibility.
\n Consequently, they may lack the life experience, expertise and
\n know-how to manage these organisations effectively. The furore
\n around inheritance tax for business and farm owners since the
\n government first announced changes in Budget 2024 seems to keep
\n rolling on. On 23 December, the government announced yet another
\n change by increasing the nil band for business and farming assets
\n to \u00a32.5m (up from \u00a31m) per person. This is the second major
\n concession since the original proposals and just three months
\n before the new rules come into force from 6 April 2026.\u201d
\n<\/p>\n
\n Paul Townson, a tax partner at BDO
\n \u201cMany of our business and farming clients have been hugely
\n concerned about the new rules with some having been forced into
\n changing their succession plans already. For some, that effort
\n may now prove to have been unnecessary \u2013 assuming that there
\n aren\u2019t even more changes to the proposals before next April.
\n While the increase in the nil band is a sensible move, it\u2019s
\n difficult to understand why these changes have been announced in
\n such an incremental way and within less than a month after the
\n Budget. The stress this whole process will have caused to
\n business owning families should not be underestimated. Once the
\n new rules are finally implemented, the Government should commit
\n to a moratorium on any further tightening of the IHT rules for at
\n least 10 years. Then owners could have some certainty over how
\n they can pass on their business to the next generation.\u201d\u00a0
\n<\/p>\n
\n Adam Brewer, senior investment director at Rathbones
\n (Exeter office)
\n \u201cGenerally, this further dilution of the original punch will
\n likely be welcomed by farmers. However, let\u2019s not forget they are
\n still contending with the usual pressures of hefty capital costs
\n and wafer-thin profit margins. Even the eventual \u00a35 million
\n allowance may still fall short of preventing family farms from
\n being broken up, and ongoing political uncertainty only adds to
\n the anxiety. While the higher threshold may feel like a
\n pre-Christmas reprieve, many farmers still face a hefty
\n inheritance tax bill. This change doesn\u2019t remove the need for
\n robust planning. Decisions on\u00a0land use, business structure,
\n and valuations will ultimately determine the longevity of the
\n family farm. Families should review succession plans now
\n \u2013\u00a0timely advice can make the difference between relief and
\n regret.\u201d
\n<\/p>\n
\n Robert Salter, director at Blick Rothenberg, an audit,
\n tax and business advisory firm
\n \u201cThe inheritance tax relief threshold rise to \u00a32.5 million
\n announced [yesterday] by the Government is welcome news for
\n farmers and family-owned businesses. This is an early Christmas
\n present for farmers and family-owned businesses and should be
\n welcomed, particularly given that it was generally accepted that
\n no further changes would be made after the November Budget
\n referenced only the ability to transfer the allowance between
\n spouses\/civil partners. However, it is disappointing that it has
\n taken the government so long to reach this decision, especially
\n given that the new rules have been heavily criticised by both
\n those impacted and the profession; the new rules have created a
\n lot of stress and angst to those impacted and the increased
\n threshold (and transferable band) goes some way to alleviating
\n that.\u201d\u00a0
\n<\/p>\n
\n \u201cIt is important that this new threshold is continually reviewed
\n by the government and updated to recognise the impact of
\n inflation on farmers and business owners over the coming years.
\n Otherwise, if the new \u00a32.5 million threshold (\u00a35 million with the
\n ability to transfer) will quickly become out-of-date and simply
\n \u2018push the problem\u2019 of IHT on family-owned enterprises down the
\n road, but not remove the issue.\u201d
\n<\/p>\n
\n Phil Kinzett-Evans, partner and head of tax at UHY Hacker
\n Young national accountancy group
\n \u201cThis is a clear last-minute concession from the government
\n \u2013\u00a0and it only exists because the original proposals caused
\n such widespread alarm among UK farmers and business owners.
\n Raising the APR and BPR threshold from \u00a31 million to \u00a32.5
\n million, and allowing it to be transferred between spouses, will
\n undoubtedly help some families. But it does not change the fact
\n that people have spent months planning for a much harsher tax
\n regime. During that period of uncertainty, many families made
\n irreversible decisions \u2013\u00a0selling land, restructuring
\n businesses or accelerating succession plans \u2013\u00a0because they
\n believed the rules were settled. Announcing such a significant
\n change this late in the process has real consequences. Once a
\n family business or farm is sold, that decision cannot simply be
\n undone.
\n<\/p>\n
\n \u201cThe Government now says most estates will be unaffected, but
\n inheritance tax is a relatively small part of the UK\u2019s overall
\n tax take. These reforms did not need to be handled in a way that
\n caused so much distress and forced action. Tax policy should give
\n families the confidence to plan long-term, not push them into
\n rushed decisions based on shifting rules.\u201d
\n<\/p>\n
\n David Lunn, partner at TWM Solicitors
\n \u201cOne point really jumps out from the announcement: the \u00a35 million
\n figure being widely reported only applies if farmers are married
\n or in a civil partnership. If a couple is cohabiting but not
\n married or in a civil partnership, they will still be capped at
\n \u00a32.5 million. While this is an improvement on the \u00a31 million
\n threshold announced previously, it is a significant shift for
\n farmers who have long assumed their APR and BPR assets would be
\n exempt without limit. For those with farm or business assets
\n worth more than \u00a32.5 million, this creates a powerful incentive
\n to consider marrying a long-term partner \u2013\u00a0something that
\n may not previously have felt necessary where inheritance tax was
\n not seen as a concern under the current rules, due to change in
\n April 2026.\u201d
\n<\/p>\n
\n \u201cFrom a technical perspective, the government has now
\n significantly widened the relief cap for Business and
\n Agricultural Property Relief. The 100 per cent relief ceiling has
\n increased from \u00a31 million to \u00a32.5 million per individual and,
\n crucially, this allowance remains transferable between spouses
\n and civil partners, allowing couples to pass on up to \u00a35 million
\n of qualifying assets free from inheritance tax. Trusts will also
\n benefit from the same \u00a32.5 million cap per trust, with any excess
\n value above these limits qualifying for 50 per cent relief, as
\n previously proposed.
\n<\/p>\n
\n \u201cThese changes follow significant opposition to the original
\n reforms. Industry reaction was swift and strong. A CBI Economics
\n survey for Family Business UK found that nearly a quarter of
\n family businesses, and 17 per cent of family farms, were already
\n cutting jobs or pausing recruitment in response. The National
\n Farmers\u2019 Union described this as a \u2018wake-up call\u2019 for ministers,
\n warning of serious cuts to investment if the reforms went ahead
\n unchanged. The decision to raise the APR and BPR thresholds will
\n make a real difference for families with significant agricultural
\n and business assets. Allowing couples to shelter up to \u00a35 million
\n from inheritance tax goes further towards supporting continuity
\n for family farms and businesses, and reduces the risk of forced
\n asset sales simply to meet tax liabilities.\u201d
\n<\/p>\n
\n Claire Trott, head of advice at St James\u2019s
\n Place
\n \u201cThe increase in the 100 per cent inheritance tax relief
\n available on Agricultural and Business Property to \u00a32.5 million
\n should be welcomed, particularly following the 2025 Budget\u2019s move
\n to allow these reliefs to be passed on to a surviving spouse on
\n death. This will be positive Christmas news for business owners
\n and farmers, for whom IHT has been a growing concern since the
\n reductions announced in the 2024 Budget.
\n<\/p>\n
\n \u201cAt the same time, further pressure has been added to estate
\n planning through the decision to bring unused pension funds
\n within the scope of inheritance tax from April 2027, alongside
\n the continued freezing of the nil rate band and residence nil
\n rate band. Taken together, these changes have made legacy
\n planning increasingly complex and reinforced the importance of
\n personalised, professional advice. Advice can help people
\n navigate policy changes calmly and sensibly, avoiding hasty or
\n ill-considered decisions. We have already seen many people make
\n unadvised changes to their plans, only to regret them later.\u201d
\n<\/p>\n
\n James Ward, partner and head of private client
\n department\u00a0at Kingsley Napley
\n \u201cWhile many argue that any inheritance tax on farms and
\n businesses is fundamentally unfair, the increase to \u00a35 million
\n per couple will make a huge difference and take many owners out
\n of the inheritance tax net. It is another positive change to this
\n much criticised piece of legislation, after the November Budget
\n announced that the reliefs could be transferred between spouses
\n or civil partners. While today\u2019s change is positive, it will
\n cause issues with the planning already done. A number of farmers
\n have already gifted assets, often in a way which they would
\n rather not have done, and spent significant money on accountancy
\n and legal fees. For instance, gifting assets to the next
\n generation without adequate protection of those assets. Now all
\n that planning is effectively worthless but has led to more
\n complex ownership structures and potential family disagreements.
\n<\/p>\n
\n \u201cAlso there is no detail regarding non-farming businesses.
\n Clarification is needed to make sure this relief is across both
\n Agricultural Property Relief and Business Relief. Will it also
\n give trusts the same level of exemption? Effectively it has saved
\n a married couple \u00a3600,000 of inheritance tax, if they have
\n qualifying assets above \u00a35 million, as their combined exemption
\n has increased by \u00a33 million and tax is payable at 20 per cent.
\n However, many farms and businesses will still be liable to pay
\n inheritance tax, so the impact of the legislation will still be
\n felt.\u201d
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