Business Relief has dominated financial headlines over the past year. While much of the debate has centred on farmers and agricultural businesses, the changes to inheritance tax reliefs affect a much broader group – including business owners, entrepreneurs, and anyone using Business Relief in their Inheritance Tax (IHT) planning.
With significant changes taking effect in April 2026, understanding what these reliefs do and how they can still work for you has never been more important.
Business Relief (BR) and Agricultural Relief (AR) are inheritance tax reliefs designed to reduce the value of certain qualifying assets when calculating your estate for IHT purposes.
BR applies to qualifying trading businesses and unquoted company shares, while AR applies to qualifying agricultural land and buildings. Where conditions are met – including minimum ownership periods – assets can attract 100% relief, meaning they are effectively excluded from the IHT calculation.
Historically, these reliefs have helped families pass on businesses and working farms without being forced to sell assets to meet an inheritance tax bill. That fundamental purpose has not changed – but the rules have.
The Autumn Budget 2024 marked a clear shift in policy. For the first time, the Government announced that both BR and AR would be subject to a cap. Previously, there was no upper limit on the value of assets that could qualify for 100% relief.
Following consultation and feedback from the farming community, the Government increased the allowance for full relief to £2.5 million per individual in December 2025.
From April 2026, here's how it works:
It’s easy to focus on what has changed, but it’s just as important to recognise what remains. £2.5 million per person – or £5 million per couple – is still a substantial allowance, particularly when combined with other IHT planning tools.
But here's why this matters more than ever: from April 2027, unused pension funds are due to be brought into your estate for inheritance tax purposes.
For many families, pensions represent one of the largest components of their overall savings – often several hundred thousand pounds or more. Until now, they have sat outside your estate for IHT purposes. Their inclusion could significantly increase IHT bills, with families who never expected an IHT problem potentially facing substantial liabilities. This highlights the growing importance of effective estate planning.
Against this backdrop, BR and AR become even more valuable. They continue to offer one of the few remaining ways to reduce inheritance tax exposure without giving assets away and without losing access to capital.
You do not need to own a trading business to benefit from Business Relief. BR-qualifying investment solutions provide exposure to the relief through diversified portfolios of qualifying trading companies. For clients facing increased IHT exposure due to pension inclusion, these investments can help reduce the size of your taxable estate – though they are higher-risk and should form part of a broader financial strategy.
The combination of caps on BR and AR reliefs, plus the inclusion of pensions from April 2027, makes this a critical time to review your estate planning. Consider:
The landscape of inheritance tax planning is shifting significantly. Between the new caps on Business and Agricultural Reliefs and the inclusion of pensions in estates from April 2027, many families will need to rethink their approach to passing on wealth.
The good news is that there is still time to plan. Whether it's making better use of existing reliefs, exploring BR investment solutions, or restructuring your estate to minimise tax exposure, the right strategy can make a significant difference to what you are able to pass on to the next generation.
Now is the time to review your estate planning strategy. If you would like to discuss how these changes may affect you and your family – particularly the impact of pensions being brought into scope for IHT – please get in touch. We are here to help you navigate the evolving tax landscape and ensure your planning remains aligned with your goals.
This article is for information only and does not constitute personal financial or tax advice. Investments that qualify for Business Relief are higher risk, may be illiquid, and are not suitable for all investors. The value of investments can fall as well as rise, and you may get back less than invested. You should seek professional advice before making any financial decisions.
