For established property families and business owners, 6 April 2026 marks a significant change in the inheritance tax (IHT) landscape. The government has introduced a new combined cap of £2.5 million on 100% Agricultural Property Relief (APR) and Business Property Relief (BPR). Understanding how this cap interacts with your estate is now the most critical component of portfolio integrity.
The New 20% Effective Tax Rate
Under the new rules, the first £2.5m of qualifying assets remain exempt from IHT. However, any value exceeding this threshold will now attract 50% relief, resulting in an effective IHT rate of 20% on the excess. For a couple, this allowance is transferable, effectively allowing up to £5 million (or £6.3m when including the nil-rate band) to be passed down tax-free.
Actionable Planning Before the Deadline
The new cap applies to gifts made on or after 30 October 2024 if the death occurs after 6 April 2026. Investors must now assess their liquidity to ensure sufficient assets are available to meet potential tax liabilities without forced sales. At M Class Property, we lead with Integrity and Market Expertise, advising clients on restructuring their holdings—including the use of lifetime gifts and trusts—to safeguard their legacy under these tighter rules.
Is your estate plan future-proof? Speak with a real person at M Class Property to review your 2026 tax positioning.
