Key Takeaways
- A new combined £2.5m allowance will apply across qualifying Business Relief (BR) and Agricultural Property Relief (APR) assets
- AIM shares and certain other market-traded holdings that previously benefited from full relief will be reduced to 50% relief
- Trust planning becomes more complex, with a separate trust allowance and greater relevance of periodic and exit charge
The reforms to Business Relief (BR) and Agricultural Property Relief (APR) mark a significant shift in the inheritance (IHT) tax planning for business and agricultural assets. For financial advisers, the changes mean greater focus on the level of relief available and the planning implications.
Why this matters for financial advisers
For many years, estate planning involving qualifying business and agricultural assets has often been built on the assumption that those assets could pass with little or no IHT exposure, provided the relevant relief conditions were met. That assumption is changing.
The reforms do not remove BR or APR, but they do reduce the extent to which large estates, private company interests, farming assets and BR focused portfolios can be passed free of IHT. For advisers, the practical effect is that planning conversations will need to shift from a simple question of “does it qualify?” to the more important question of “how much of it qualifies for full relief?”
