The Government’s late changes to Agricultural Property Relief and Business Property Relief have eased some immediate Inheritance Tax concerns for family businesses.

Advisers at TWP Accounting say the reforms still leave many owners exposed and underline the need for early planning.

From 6 April 2026, business assets will fall within the Inheritance Tax regime, with the first £2.5 million qualifying for 100 per cent relief. Value above that level will be taxed at an effective rate of 20 per cent.

Andrew Goddon, Partner and Head of Taxation Services at TWP, says the increase is helpful but should not be mistaken for a complete solution.

“The higher threshold will take many smaller family businesses and farms out of scope, which we know is positive news for those that do now fall beneath the £2.5 million threshold,” he says.

“However, even with the higher cap, this is still not the unlimited relief that many businesses and farmers have been protected by thus far. The businesses that have grown or hold significant value will still face an Inheritance Tax bill and that liability needs to be planned for.”

He adds that the policy change highlights how sensitive business succession can be to tax reform.

“These reliefs exist because forcing a tax charge at the point of succession can destabilise otherwise healthy businesses,” Andrew says.

“If planning is ignored, families may be left managing long-term tax debt or facing difficult decisions about selling assets.”

While the Government has confirmed that Inheritance Tax on business assets can be paid over ten years in equal, interest-free instalments, Andrew warns that this can still place a heavy burden on the next generation.

“Ten years of instalments may sound manageable, but it is still a long-term drain on cash flow that many will simply not be able to afford,” he says. “Advance planning gives families more control and more options to limit any disruption to business operations.”

In November 2025, Chancellor Rachel Reeves also announced that the APR and BPR allowance will be transferable between spouses and civil partners.

“If used correctly, the option to transfer the allowance will provide a total allowance of £5 million for qualifying couples, representing a potential Inheritance Tax saving of around £600,000.

“To ensure they can benefit from this relief, spouses and civil partners should review their existing Wills and any uneven ownership structures.”

Andrew advises business owners to review their Inheritance Tax position now before the new rules are enforced.

“Given the number of developments to the Government’s Inheritance Tax reforms, I urge all business owners and farmers to seek advice and review the Inheritance Tax position now to estimate what size tax bill they can expect and plan for how liabilities can be minimised.

“Part of the review will include valuing their business interests, how assets are owned and whether sufficient liquidity exists to meet any future tax bill.”

TWP Accounting has more than 100 years of experience supporting individuals and businesses with all their accounting needs from its offices across Weybridge, Guildford, Cranleigh and Kingston upon Thames.

For further support with succession planning or Inheritance Tax planning, please contact us.