Inheritance Tax changes to Agricultural and Business Property Relief explained

From 6 April 2026, there will be a £2.5 million cap to the 100% relief that businesses currently receive under Agricultural and Business Property Relief. 

This, along with reforming how shares are taxed, will mean that more family businesses across the UK will face a much higher Inheritance Tax bill. 

And, as business cash is commonly tied up in assets, more estates could struggle to find the funds to meet the 6-month Inheritance Tax payment deadline.

At Provira, we know that dealing with this process comes at an incredibly difficult time. 

We help families find the financial means to cover urgent estate costs, such as Inheritance Tax, every day, relieving this pressure, and allowing them to focus on more important things.

Our Estate Advance provides access to up to 50% of the net value of the estate within days, allowing you to cover all estate costs. We keep fees low by charging simple interest, not compound interest, and don’t require monthly repayments. 

We are simply repaid in full once probate is complete and the funds are released from the estate. 

For more information, speak with our team today.

How does Business Property Relief work for Inheritance Tax?

Business Property Relief (BPR) reduces, or entirely eliminates, the amount of Inheritance Tax an estate has to pay on qualifying business assets. Historically, estates could benefit from either 50% or 100% uncapped relief, depending on the asset, meaning a lot of the estate was able to be passed down without paying a penny of tax.

Assets that qualify must have been held in an active trading business for at least two years and include:

• Sole trader or partnership business interests

• Shares in unquoted or private companies: those not listed or traded on a public stock exchange, including AIM shares.

• EIS holdings: a government initiative which encourages investment in early-stage businesses through venture capital.

• Shares that hold more than 50% voting right in a listed company

• Business land and machinery owned by the deceased and used for their business

• Business land and machinery used by the deceased’s business that is held in a trust

It’s also important to know which assets don’t qualify for BPR. Contributing factors include: 

• The type of business. For example, companies dealing with securities, stocks or shares, land or buildings, not-for-profits, and companies that are being liquidated do not qualify.

• The type of asset. For example, if it already falls under Agricultural Relief, was not used for business needs in the last 2 years or it is not needed for business use in the future.

A key reason BPR is so important for businesses is due to the fact that Inheritance Tax must be paid within 6 months of the date of death. If the deadline is missed, an estate may face unwelcome penalties or charges.

For estates containing businesses, where cash is often tied up in assets, it can be a struggle to find the funds to cover the bill before the 6 months are up. 

This is why knowing that products such as our Estate Advance exist can be a lifeline for families. If you are looking for a way to pay Inheritance Tax on your business, read more about our Inheritance Tax Loans for Business Owners or reach out to our team to discuss your loan today.

What are the changes in Business Property Relief in 2026?

The changes to Business Property Relief, applicable from 6 April 2026, include:

A new, combined £2.5 million cap per person for Agricultural and Business Property Relief

As of 6 April 2026, a new cap of £2.5 million will be applied to all qualifying business and agricultural assets. Anything below this threshold will still receive 100% relief.

Anything above this threshold will now receive just 50% relief, meaning the remaining value of the estate will be charged a 20% rate of Inheritance Tax.

A key thing to note is that, while the £2.5 million threshold will place more financial pressure on estates, it has similar rules to other Inheritance Tax allowances. 

One of the allowances is transfers between spouses or civil partners. As the allowance is per person, it can be transferred to a surviving partner. This means an estate could combine the allowances and potentially pass on £5 million tax-free. 

Also, as with the nil-rate band, the seven year rule applies. For those looking to pass on their business and minimise a future Inheritance Tax bill, if they gift it more than seven years before their death, it will be passed on tax-free.

Although it’s worth noting that, as the announcement about the changes was made on 30 October 2024, all lifetime gifts made after this date fall under the new rules if the date of death is after 6 April 2026.

AIM shares are now only eligible for 50% relief 

From April 2026, AIM shares will only be eligible for 50% relief, down from 100% relief. 

This is a particularly important update for investors, as AIM shares are often used as a tax-efficient tool when planning an estate.

These shares also sit outside the £2.5million allowance, meaning they are now directly susceptible to being charged Inheritance Tax. 

Inheritance Tax can be paid in instalments 

With the introduction of a threshold cap putting more estates in the taxable range, Inheritance Tax for businesses can now be paid to HMRC in ten equal annual interest-free instalments for all qualifying assets. 

While this can seem like a lifeline, the challenge of raising funds quickly and meeting payment deadlines can cause families to disrupt the business by selling off shares or refinancing before they are ready to.

Luckily, another option exists.

With Provira’s Estate Advance, families can make the right decisions for their business, without being pressured by looming payment deadlines.

Our loan provides access to up to 50% of the net value of the estate within days, allowing you to pay Inheritance Tax on time, without disrupting the day to day running of the business.

We only charge simple interest, not compound interest, and don’t require monthly repayments. The total loan amount is simply repaid in full once money is released from the estate. 

Plus, there’s no personal liability for the executor taking out the loan.

To find out more and speak with a compassionate member of our team, fill out our form today. 

It only takes a few minutes.

What is Agricultural Relief in Inheritance Tax?

Agricultural Relief historically provided 100% relief for qualifying farmland and farm-related assets. This is due to these assets being illiquid, meaning their value lies in land or enterprise, not cash. 

100% relief has historically been available for all land that is actively farmed by the owner. 

Providing 100% relief has, until now, meant that farming businesses have not had to deal with the financial pressure of sourcing funds to pay tax on an asset that is not easily converted into cash.

This financial pressure can often lead to families being forced to sell parts of the estate just to cover the bill.

What are the changes to Agricultural Property Relief?

After 6 April 2026, Agricultural Property Relief (APR) will share a combined £2.5 million cap with Business Property Relief. 

The first £2.5 million of qualifying assets will still receive 100% relief. Anything above this threshold will only receive 50% relief and so will be taxed at an Inheritance Tax rate of 20%.

This could throw up a number of cash problems for farmers. Where estate value lies in land, it is less likely that funds will be available to cover the incoming Inheritance Tax bill, particularly not before the strict 6-month HMRC deadline.

There will also be stricter criteria around what property qualifies. For example, HMRC will look more closely at exactly how a farm property is used to ensure it is definitely part of an active farm.

How Provira can help families facing Inheritance Tax changes on agricultural and business property?

When an estate has no easily accessible cash available to pay off urgent estate expenses, such as an Inheritance Tax bill, it can be both a financial and emotional strain. 

We see this every day with estates containing family businesses. When cash is tied up in business assets, meeting the 6-month deadline or annual instalment for paying off Inheritance Tax seems like an impossible obstacle. 

Many families feel forced to make drastic decisions to raise funds from the business such as selling parts off before they are ready to or refinancing.

With the upcoming reforms to Agricultural and Business Property Relief, this will unfortunately become a reality for more estates.

At Provira, we pride ourselves on providing families with a financial solution that eases this pressure and helps minimise disruption to their business.

Our Estate Advance:

• Gives access to up to 50% of the net value of the estate value within days

• Charges simple interest, not compound interest, saving money in the long run

• Doesn’t ask for monthly repayments, personal collateral, or early repayment fees

• Gets paid back in full once the funds have been released from the estate

• Handles all payments to HMRC directly, as well as liaising with legal teams

• Offers a dedicated, compassionate member of our team to guide you throughout the process

To apply for a loan, fill out our form today and a member of our team will be in touch very soon.