How April’s Inheritance Tax changes will affect family businesses and farmers

April’s Inheritance Tax changes will affect family businesses and farmers by putting a £2.5 million cap on 100% relief and reducing relief for qualifying business shares.

From April 6 2026, the new government reforms are putting an end to decades of uncapped relief, introducing a new £2.5 million combined cap on qualifying business and agricultural assets and changing the amount of relief that can be applied to specific business shares from 100% to 50%. 

Closer inspection will also be carried out to ensure assets legitimately qualify for relief. 

Ultimately, this means families that own businesses or land may have to pay more Inheritance Tax (IHT), even if they do not have the cash available to cover it.

And when IHT bills are due within 6 months of death, this can cause unnecessary emotional and financial strain.

Luckily, this is where we can help. 

Provira’s Estate Advance gives families access to up to 50% of the net value of their estate within days, meaning they can cover urgent costs such as an Inheritance Tax bill without disrupting the day to day running of their business.

We even have specific Inheritance Tax loans for business owners struggling with the new IHT changes.

Our loan also: 

• Charges simply interest, not compound interest. Saving you money in the long run.

• Doesn’t charge early repayment fees.

• Doesn’t require personal liability or collateral.

• Doesn’t ask for monthly repayments. The full loan is simply repaid in full once probate is complete and money has been released from the estate. 

• Provides a dedicated, compassionate member of our team to guide you through the process.

To explore our Estate Advance, fill out our form and we’ll be in touch very soon.

How do the new Inheritance Tax changes affect family businesses?

Family businesses will be affected by the new Inheritance Tax changes in a few different ways: 

£2.5 million cap 

Where a family business used to receive unlimited 100% relief on qualifying assets, from April 2026, they will receive 100% relief only on the first £2.5 million of combined agricultural and business property assets in their estate. This cap is applied per person. 

Anything above the £2.5 million threshold will receive 50% relief, meaning that the remainder of the estate will be taxed at a 20% tax rate. 

For example, if an estate is worth £5 million, the first half of the estate receives 100% relief. The other half will now only receive 50% relief. This means that 2.5 million of the estate will be taxed at 20% (half of the standard IHT rate of 40%), meaning the estate could face an Inheritance Tax bill of £500,000.

Similar to the existing allowances surrounding Inheritance Tax, with the cap comes rules around spousal transferral and timelines which, if used wisely, could reduce your Inheritance Tax bill.

New rules for AIM shares

Similar to the unlimited relief qualifying business assets used to receive, AIM shares used to be 100% exempt from Inheritance Tax. They have traditionally been used as a key estate planning tool to minimise the amount of Inheritance Tax that will need to be paid in the future.

From April 2026, this relief drops from 100% to 50%, regardless of the value of the share or investment. This is something that will significantly shift the way in which estates are planned, particularly as AIM shares sit outside of the £2.5 million cap so they will be charged 20% tax regardless of their value.

Ultimately, both of these changes put families at a higher risk of being taxed. The cap, coupled with lower relief on shares, means more of an estate is likely to be bumped over the threshold and into the taxable range.

And when the value of the estate is tied up in business assets, when the 6-month HMRC deadline looms, it can seem like an impossible obstacle. 

That’s where our Estate Advance could provide the breathing room you need. 

Provira’s Estate Advance gives you access to up to 50% of the net value of the estate, within days. We charge simple interest, not compound interest, and we don’t ask for monthly repayments. When probate is complete and the funds are released, the loan is then repaid directly from the estate. 

Plus, if money becomes available sooner than expected, we don’t charge early repayment fees, either. 

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

What can businesses do to avoid Inheritance Tax?

There’s a few actions businesses can take to avoid Inheritance Tax. We’ll walk through strategies you can put in place to minimise your Inheritance Tax bill in the wake of these reforms, although we always recommend you plan your estate with a specialist adviser so you can be sure it’s as tax-efficient as possible.

1. Maximise spousal transfer: As the £2.5 million cap is applied per person, the allowance is able to be transferred to a surviving spouse. This then means up to £5 million is able to qualify for 100% relief.

2. Plan ahead: Review how your business is structured to maximise the combined allowance. Also, having your assets valued early allows you to know what your IHT bill might look like and free up any cash that may be needed to settle the future cost.

3. Consider gifting: As with regular IHT gifting rules, if a gift is given more than 7 years prior to death, the gift is tax-free. This also applies to business interests. As the reform announcement was made in October 2024, any gifts made after this date count towards the £2.5 million allowance if the death falls after April 2026 and before the 7 year mark. 

4. Put value in trusts: Trusts have their own £2.5 million allowance, which have a 10-year timeline for becoming tax-free. They also come with their own set of rules around qualifications, so professional advice is recommended.

5. Pay in instalments: Inheritance Tax payments can be spread over 10 annual interest-free instalments to provide an easier way to pay your bill. While this is helpful in the long term, meeting the initial deadlines can still be tricky for estates where cash is tied up in assets.

What is the Agricultural Relief from April 2026?

From April 2026, Agricultural Relief will be capped at £2.5 million as part of the new combined Agricultural and Business Property Relief tax-free allowance. 

Agricultural Property Relief (APR) applies to land that is either farmed by the owner for more than 2 years, or land owned for over 7 years, but not necessarily farmed by the owner. 

It’s important to note that there’s not a separate threshold for each type of relief. This means that the estates that will be most affected by these reforms will be land-heavy, as this will take up most of the £2.5 million allowance, pushing everything of value above that threshold and into the taxable range. 

As discussed above, any gift made after October 2024 will count towards the £2.5 million allowance if the gifter dies after April 2026 and before 7 years has passed. This applies to anything agricultural as well. 

How Provira can help family businesses and farmers through April’s Inheritance Tax changes

The reality is these reforms will put more estates at risk of footing higher Inheritance Tax bills. 

For family businesses and farmers, the biggest challenge will be meeting the demands of this Inheritance Tax bill while figuring out how to release funds quickly from an illiquid estate.

At Provira we see executors struggling with complex estates every day. Providing families with a financial solution to ease pressure, stress and emotional strain is something we are incredibly proud of. 

For estates containing businesses it has an added layer. Often, families feel forced to sell off parts of the business or disrupt operations quickly, just to meet HMRC deadlines. 

Our Estate Advance provides a bit of breathing room that prevents family businesses from having to make any drastic decisions now. 

With our loan you can:

• Pay off Inheritance Tax immediately

• Prevent added stress or disruption for your business

• Keep the probate process moving forward

Because our Estate Advance:

• Gives you access to up to 50% of the total value of the estate

• Transfers the money within days

• Requires no personal liability for the loan

• Doesn’t charge for early repayment

• Is repaid in full, directly from the estate, only once probate is complete

If these reforms have impacted your estate and you need to cover urgent expenses, speak to Provira today, our team is here to help.