Inheritance Tax Is Changing in April — Here's What You Need to Do Now

Some of the biggest changes to Inheritance Tax (IHT) in decades are coming into effect from April 2026. If you own a business, farmland, or have investments in AIM-listed shares, the reforms could significantly increase your tax exposure — and the window to act under the current, more generous rules is closing fast.

Here's what's changing and what you should be thinking about right now.

Business Property Relief and Agricultural Property Relief are being capped

Currently, Business Property Relief (BPR) and Agricultural Property Relief (APR) can provide 100% relief on qualifying assets — meaning they can pass outside of your estate free of IHT entirely. That's been the cornerstone of succession planning for business owners and farming families for a long time.

From April 2026, that changes. The new rules introduce a cap:

The first £2.5 million of qualifying assets per person will still attract 100% relief. But anything above that threshold will only qualify for 50% relief. For estates with significant business or agricultural assets, the difference in tax exposure could be substantial.

AIM-listed shares are also affected. Currently eligible for 100% relief, they'll be restricted to 50% under the new rules — full stop, regardless of value.

If your existing succession strategy was built around unlimited relief, it needs revisiting.

There's still time to act — but not much

Because the new caps don't apply until April 2026, there's a limited window to take advantage of the current rules. That might mean gifting business or agricultural assets into trust now, transferring assets to the next generation while 100% relief is still fully available, or restructuring ownership to make the most of what's on offer before the deadline.

Any gifts made now could also reduce the overall value of your estate for future IHT purposes — provided you survive seven years from the date of the gift. That's an important caveat, and any decisions need to be made carefully with the right advice, taking into account family dynamics, business control, and commercial practicalities.

Your Will may no longer do what you think it does

This is a point that often gets overlooked. If you've got a Will in place that was drafted with the current IHT reliefs in mind, it may no longer achieve the outcome you intended once the new rules are in force.

It's worth reviewing whether your business or farming assets will still pass to the right people in the most tax-efficient way, whether assets should go directly to family members or via a trust, and whether any shareholder agreements, partnership arrangements, or cross-option agreements need updating alongside your Will.

Don't overlook the smaller exemptions either

Alongside the bigger strategic decisions, it's worth making full use of the everyday gifting exemptions that are already available. The £3,000 annual exemption — with the option to carry forward any unused amount from the previous year — is a simple and often underused starting point. You can also gift up to £250 per person per tax year to as many individuals as you like, and there are specific allowances for wedding gifts depending on your relationship to the couple.

None of these feel dramatic on their own, but used consistently over time they can meaningfully reduce the value of your estate.

Regular gifts from surplus income — a powerful tool most people ignore

If you have income that exceeds your normal outgoings, you may be able to make regular gifts from that surplus — and those gifts won't be subject to the seven-year rule that applies to most other lifetime gifts.

To qualify, the gifts need to form a pattern rather than being one-off transfers, and they shouldn't reduce your standard of living. For people with higher incomes, this can be one of the most effective long-term estate planning tools available. It's also one of the most commonly overlooked.

What should you do next?

The April 2026 changes are significant, and the earlier you start planning, the more options you have. Families who act now can still maximise the reliefs available under the current regime, restructure ownership in a considered way, and update their estate plans before the new rules take effect. Those who wait will have fewer choices.

At Alera Accounting & Advisory, we can help you model the impact of the changes on your estate, explore gifting strategies, review your Will and succession plans, and make sure your arrangements are set up the right way for the future.

If you'd like to talk it through, get in touch with our team today.