The Autumn Budget 2025 has introduced further reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR), which will affect many working individuals and business owners.
However, in a surprising announcement, Chancellor Rachel Reeves has now increased the proposed threshold to £2.5 million, with the changes due to take effect on 6 April.
Despite this welcome increase, there will still be additional tax liabilities, especially where assets have been passed down through generations.
Our Supervising Department Director, Donna Smy, explains how the Autumn Budget will affect your Will and estate planning.
What are the main reforms?
One of the most debated aspects of the recent Autumn Budget was the decision not to revise the thresholds that were originally announced in the 2024 Budget.
The 2024 Budget announced assets that currently qualify for 100 per cent APR or BPR relief would be reduced to 50 per cent relief on values that exceed a £1 million allowance.
Following the recent announcement, couples will now be able to pass on up to £5 million of agricultural or business assets between them, on top of the existing allowances such as the nil-rate and residence nil-rate band.
Farmers, business owners, investors and anyone relying on these reliefs are amongst those targeted and understanding how it affects your estate planning is important.
In addition, Alternative Investment Market (AIM) shares will see their BPR reduced from 100 per cent to 50 per cent, affecting long-term investments and succession planning.
How should you prepare your finances for the reforms?
Many existing estate plans may have not accounted for fiscal drag or the challenges faced by asset-rich, cash-poor estates, such as family farms and businesses.
While lifetime gifting has traditionally been an important part of succession planning, there is now alternate approaches on how to manage IHT liabilities.
Careful estate planning remains crucial with further IHT reforms expected, including the inclusion of unspent pension pots.
These changes may mean that:
- Existing Wills no longer reflect current policies
- Lifetime gifting plans need to be reviewed
- Families may require greater liquidity to fund future IHT bills
- Trusts needing to reassess the 10-year IHT charges and exit charges on distributions
Families dealing with incapacity or outdated Wills may have challenges updating their affairs in time before April 2026.
Seeking early professional advice can help assess what the new reforms and policies mean and how they will affect your estate and assets.
Why is financial planning needed?
With less than four months before the rules take effect, many individuals may struggle to review their Wills or consider lifetime gifting in time.
Protecting your family’s wealth is important and our specialist team can help assess how the new APR and BPR limits will affect you.
Taking early action is important to giving you the best chance of reducing inheritance tax and preserving your assets.
If you require advice on how to pass your estate on as efficiently as possible, contact our Wills, trusts and probate team.
