Major changes to inheritance tax announced in the October 2024 Budge

Major changes to inheritance tax announced in the October 2024 Budget will go ahead as planned in 2026, according to new draft legislation and subject to confirmation in the Autumn 2025 Budget.

From 6 April 2026, business and agricultural assets will qualify for only a £1m allowance of 100% relief and any value in excess of this will be subject to a reduced rate 50% relief. 

The Government released the draft legislation for the changes to business property relief (BPR) and agricultural property relief (APR) on 22nd July following on from the major announcements made in the 30 October 2024 Autumn Budget.

The headline is that the draft legislation will, if enacted into law, introduce all of the changes as announced by Rachel Reeves back in October 2024, despite significant lobbying since October.It had been hoped that, even if the rules were to be introduced, that there may be some adjustments and concessions – for example enabling spouses to transfer any unused £1m allowance on death. However, it is confirmed that the £1m allowance will not be transferrable.

The draft legislation will likely be passed into law in Finance Act in early 2026. So, it is wise to plan now on the assumption these rules will come into force, given the Government's reaffirmed commitment and majority in Parliament. 

We would expect further detailed guidance from HMRC on the application of the legislation next year.

Please get in touch to discuss your succession plans as a result of these significant changes.  

Taking steps now to reduce the impact of the tax liability on your family and business will require consideration from your tax advisor, solicitor and financial advisor to be able to consider all implications and the best way forward.

Carmarthen Branch - Llys Deri, Parc Pensarn, Carmarthen, SA31 2NF

01267 237534 | carmarthen@lhp.co.uk

Haverfordwest Branch - 1st Floor Agriculture House, Winch Lane, Haverfordwest, SA61 1R 01437 766749 | haverfordwest@lhp.co.uk

Lampeter Branch - Tŷ Harford, Sgwâr Harford, Llambed. SA48 7HD

01570 422204 | lampeter@lhp.co.uk

Tenby Branch -Barclays Bank Chambers, 18 High Street, Tenby, SA70 7HD

01834 844743 | tenby@lhp.co.uk

Aberaeron Branch - 1 North Road, Aberaeron, Ceredigion SA46 OJD

01545 570401 | Aberaeron@lhp.co.uk

Cross Hands Branch - Suite 3 & 6, Block B, Llys Y Barcud, Cross Hands, Llanelli, SA14 6RX 01269 834877 | crosshands@lhp.co.uk

Aberystwyth Branch - Aberystwyth Innovation & Enterprise Campus, Gogerddan, Aberystwyth, Ceredigion SY23 3EE

01970 601188 | Aberystwyth@lhp.co.uk 

Llandovery Branch - Crown Stores, 31 High Street, Llandovery, SA20 0DD

01550 910910 | Llandovery@lhp.co.uk