Inheritance Tax is changing in the Uk

The proposals announced in the Autumn Budget 2024 regarding Inheritance Tax (IHT) will have significant implications for farmers, business owners, and individuals with substantial pension funds or international ties.

With changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), alongside the inclusion of pensions in IHT calculations and a shift in rules for non-UK domiciled individuals, the landscape of inheritance planning is set to change.

What are the main changes?

A restriction of Agricultural Property Relief (APR) and Business Property Relief (BPR) to £1million,
A restriction of BPR in connection with Alternative Investment Market (AIM) Shares and Investments from 100% to 50%,
Unused pensions to come within your IHT calculations, and
A change to the IHT rules in connection with non-UK domiciled individuals.

What will the proposed IHT reform mean for you?

Currently APR and BPR offer a very valuable shelter from IHT, with relief being available at a rate of 100% or 50%, depending on the type of qualifying asset held. In each case the relief is unlimited.
From 6 April 2026, the availability of 100% APR and BPR will be capped at a total of £1million (but see below for details of changes specific to Alternative Investment Market (AIM) shares). For taxpayers with qualifying agricultural or business assets which exceed this amount, the rate of relief will reduce to 50%, so that the surplus value will be subject to IHT at 20%.
The IHT changes will create new tax exposures for many people sitting on significant pension funds, and will also make the administration of pensions and estates far more complex than before.