The recent UK Budget introduced significant changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) from Inheritance Tax. Starting April 6, 2026, the full 100% relief will be limited to the first £1 million of combined agricultural and business property.
For property values exceeding this threshold, the relief rate will decrease to 50%. Additionally, shares listed on markets not recognised as official stock exchanges, such as the Alternative Investment Market (AIM), will only qualify for 50% relief, regardless of their value.
These reforms aim to better target the reliefs and ensure that the majority of estates remain unaffected. The government estimates that nearly three-quarters of estates claiming APR and the majority of those claiming BPR in 2026–27 will not be impacted by these changes.
However, these adjustments have sparked concern among farmers and business owners. Critics argue that the £1 million cap may not be sufficient for many family-owned farms and businesses, potentially leading to increased tax liabilities and financial strain.
The government has announced plans to publish a technical consultation in early 2025 to address the detailed application of these reforms, particularly concerning lifetime transfers into trusts and charges on trust property.
What is clear from this news is who is supporting the Farmers as the National Farmers Union is out there fully promoting their concerns.
What is not very clear is who is supporting businesses as the CBI and the Chamber of Commerce alongside the Federation of Small Business all appear very quiet on the subject.
You can rest assured that biz4Biz who have already raised concerns about business asset transfers to encourage the development and growth of medium sized companies is also very confused by the disappearance of BPR. Perhaps, however this change might deliver the funding requested to ensure asset transfer and the amalgamations that could be created as a result.
As with the Farmers protests there is so much to be said for encouraging the next generation to maintain a farm or other business, created by previous generations and the tax for a government to spend is one aspect but we truly feel more businesses will be destroyed as a result.
INVEST – INVEST – INVEST is one great idea but not at the cost of DESTROY – DESTROY – DESTROY existing established organisations
The Government truly needs to re-examine this change to a very long-standing concept.
Business Property Relief (BPR) and Agricultural Property Relief (APR) were introduced in the UK to address specific economic and tax challenges, fostering business continuity and agricultural productivity.
1. Business Property Relief (BPR):
Introduced: 1976 as part of the Capital Transfer Tax regime (which later evolved into Inheritance Tax in 1986).
Purpose: To prevent the forced sale of family businesses upon inheritance due to significant tax liabilities. The government recognised that applying Inheritance Tax to active businesses could hinder their continuity, disrupt employment, and harm the economy.
2. Agricultural Property Relief (APR):
Introduced: 1925 under earlier estate tax legislation and later incorporated into the Inheritance Tax framework
Purpose: To encourage agricultural productivity by allowing farms to be passed down without the burden of heavy taxes. The relief acknowledged that agriculture was vital to food security and rural economies.
Key Objectives
Preserving Family Businesses: Both reliefs were designed to ease the transition of assets across generations, ensuring that family-owned businesses and farms could remain operational.
• Avoiding Asset Liquidation: They helped prevent scenarios where families might need to sell business or farm assets to pay Inheritance Tax.
• Economic Stability: By supporting small and medium-sized enterprises (SMEs) and agricultural enterprises, these reliefs aimed to protect employment, innovation, and rural livelihoods.
Over time, both reliefs have become central to UK tax policy, supporting entrepreneurs and farmers while promoting long-term economic sustainability. The issue here being the encouragement to the next generation to make the most of previous generations hard work and maintain the farm or business serving society in so many ways.
The changes to this relief in our recent budget has simply destroyed this key incentive as the next generations are not always keen to follow their parents by stepping into their shoes, however this significant taxation advantage was a key encouragement.
What we shall now see are increased liquidations as businesses are closed before retirement and the investments redeployed and the country moving a further step away from the creation of middle-sized businesses as a result. There is also potentially the opportunity for amalgamation and consolidation of businesses which has now greatly increased, and this will require the funding process that biz4Biz alongside BizCrunch have suggested to government they need to provide.
Gareth is co-founder and CEO of BizCrunch.
