APR and BPR reform

By way of reminder, APR can apply to ‘agricultural property’ at a rate of 100% or 50% so long as certain conditions are satisfied. BPR can also be applied to interests in ‘trading businesses’, again at a rate of either 100% or 50%. Crucially, both APR and BPR can currently be claimed without limit.

The Autumn Budget 2024 announced the Government’s intention to change the rules so that, from 6 April 2026:

• individuals will only be able to claim 100% APR or BPR up to a combined limit (for both reliefs) of £1m (with 50% relief applying over and above the £1m threshold);
• trusts holding property qualifying for APR and BPR would also be subject to caps in relation to those IHT charges that the trustees must pay; and
• BPR on shares traded but not listed on recognised stock exchanges (such as AIM shares) would reduce from 100% to 50% in all circumstances.

The Autumn Budget announcements were followed by the open consultation which provided more details of the reforms and invited comments on the proposals. Importantly, despite wide concern raised by farms and business owners, as well as wider industry bodies, many of the changes detailed in the consultation document were as anticipated. This is not expected to change significantly now that the consultation has closed, although technical aspects of the changes may.

The next step in the process is for responses to the open consultation to be considered and draft legislation published, alongside a further technical consultation later this year. This is expected late summer (possibly early autumn) 2025, although no date has been announced.

In the meantime, we recommend those impacted to consider their position so that, once legislation is published, estate planning steps can be taken as necessary prior to April 2026.  Please contact our Private Client and Agricultural & Landed Estates teams at wealth@wansbroughs.com if we can assist.