Inheritance Tax Changes in 2026 | What They Mean for You

Significant updates to the UK Inheritance Tax (IHT) regime will take effect from 6 April 2026, and for many individuals, families and business owners, these reforms will make careful planning more important than ever. At Sills & Betteridge, we are committed to helping our clients prepare for these changes with confidence and clear legal advice.

This update summarises the key reforms and highlights the practical steps you may wish to consider.

A New Cap on Agricultural & Business Property Relief

From April 2026, the long‑standing 100% relief available under Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at £2.5 million per person.  Relief above that level will be reduced to 50%, creating a 20% effective tax rate on the value in excess of £2.5 million.

Importantly, this allowance is fully transferable between spouses and civil partners, offering couples a combined relief of up to £5 million.

What this means for Clients

Those with farms, trading businesses, or high‑value business assets should now review their estate structures.

Existing plans that relied on 100% APR or BPR may no longer achieve the desired outcome.

AIM‑Listed Shares to Lose Full Relief

If you hold AIM‑listed shares specifically for IHT mitigation, the upcoming changes will be particularly relevant. From April 2026, AIM shares will move from 100% relief to 50% relief, resulting in a 20% IHT charge on these holdings.

This change affects investors of all sizes and makes portfolio reviews a priority.

IHT Thresholds Frozen Until 2031

The Government has extended the freeze on the Nil‑Rate Band (£325,000) and the Residence Nil‑Rate Band (£175,000) until 6 April 2031.

With property and investment values continuing to rise, this “fiscal drag” means more estates will become liable to pay inheritance tax, even where families do not consider themselves particularly wealthy. This makes early planning even more important to avoid unexpected tax exposure.

A Quiet but Significant Shift for Families

Recent commentary highlights that most families may not feel these reforms as a “shock”, but rather as a gradual tightening of the rules, especially where property values continue to outpace frozen thresholds. As one analysis notes, what remains unchanged may prove just as costly as what is being reformed.

Meanwhile, business‑owning families in particular will experience a more noticeable impact as reliefs they previously relied upon become capped. Estate plans will need updating to ensure that relief is not wasted unintentionally.

What Should You Do Now?

With these reforms coming into force in April, we recommend:

Reviewing wills and succession plans to ensure they make best use of available allowances;

Valuing business or agricultural assets to understand if new caps will be exceeded;

Considering lifetime gifts where appropriate and within the tightened rules;

Assessing investment portfolios, especially AIM‑based IHT strategies;

Coordinating planning between spouses or civil partners to maximise transferable allowances;

Even small adjustments now can prevent substantial tax exposure later.

How Sills & Betteridge Can Help

Our Private Client and Agricultural & Business specialists are on hand to guide you through the 2026 changes and ensure your estate planning remains robust, tax‑efficient, and aligned with your long‑term wishes.

If you would like tailored advice regarding your will, business assets, agricultural interests, or investment planning, please contact us. We are here to help you plan with clarity and peace of mind.