APR & BPR Reform April 2026: What Changes for Your Estate
If you own a farm, a business, or AIM shares, the April 2026 inheritance tax reform has significantly changed how much tax your estate pays. For the first time, agricultural property relief and business property relief are capped — and the impact on larger estates is substantial.
Key APR/BPR Changes from April 2026
What Has Changed from 6 April 2026?
Until 5 April 2026, agricultural property relief (APR) and business property relief (BPR) could eliminate inheritance tax entirely on qualifying assets — regardless of their value. A farm worth £10 million or a family business worth £20 million could pass to the next generation completely free of IHT, provided the assets met the qualifying conditions.
From 6 April 2026, this unlimited relief has been replaced with a capped system:
- First £2.5 million of combined APR and BPR qualifying assets: 100% relief (no IHT)
- Above £2.5 million: only 50% relief, meaning an effective IHT rate of 20% on the excess
- AIM shares: relief has dropped from 100% to 50%, regardless of value
This is the most significant change to agricultural and business property relief since the reliefs were introduced. If your qualifying assets exceed £2.5 million, your estate now faces inheritance tax for the first time.
Who Is Affected?
The reform affects anyone whose estate includes qualifying agricultural or business assets worth more than £2.5 million. In practice, this includes:
Farmers and Landowners
With UK farmland values averaging over £10,000 per acre in many regions, a 250-acre farm easily exceeds the £2.5 million threshold before you add the value of farmhouses, buildings, and equipment. Many working farms that were previously fully sheltered from IHT now face a tax bill.
Business Owners
Owners of unquoted trading businesses — whether sole traders, partnerships, or private limited companies — are affected if the business value exceeds £2.5 million. This includes the value of business property used in the trade.
AIM Share Investors
Investors who hold AIM-listed shares for IHT planning face a double change. AIM shares count toward the £2.5 million allowance, and the relief rate on AIM shares has dropped from 100% to 50%. Read our detailed guide to AIM shares and IHT from 2026.
Family Businesses
Family businesses with significant property, equipment, or goodwill may find that their combined value now exceeds the cap. See our family business inheritance tax case study for how BPR applies in practice.
How Does the New Calculation Work?
Under the new rules, the calculation for APR/BPR qualifying assets above the allowance works as follows:
John owns a qualifying farm valued at £4 million. He dies after 6 April 2026 and leaves the farm to his daughter.
| Component | Value | Relief | Taxable |
|---|---|---|---|
| First £2.5M of farm value | £2,500,000 | 100% relief | £0 |
| Remaining farm value | £1,500,000 | 50% relief | £750,000 |
| Other estate assets | £200,000 | None | £200,000 |
| Less: nil-rate band (NRB) | −£325,000 | ||
| Less: residence nil-rate band (RNRB) | −£175,000 | ||
| Taxable estate | £450,000 | ||
| IHT at 40% | £180,000 |
Before April 2026: John's farm would have received 100% APR relief on the full £4 million. With his other assets of £200,000 falling within the nil-rate band, his estate would have paid £0 in IHT.
After April 2026: His estate now faces an IHT bill of £180,000.
Three-Scenario Comparison: Before, During, and After Reform
The IHT rules operate across three distinct periods, each with different treatment of agricultural and business assets:
| Feature | Before April 2026 | April 2026 – April 2027 | After April 2027 |
|---|---|---|---|
| APR/BPR relief | 100%, no cap | 100% up to £2.5M; 50% above | 100% up to £2.5M; 50% above |
| AIM shares | 100% BPR | 50% relief only | 50% relief only |
| Pensions in estate | No | No | Yes — included in taxable estate |
| NRB | £325,000 | £325,000 | £325,000 |
| RNRB | £175,000 | £175,000 | £175,000 |
| Spouse APR/BPR transfer | N/A | Yes — unused allowance transferable | Yes — unused allowance transferable |
Summary of IHT rules across the three reform periods
The period after April 2027 adds the pension inclusion reform, which brings unspent defined contribution pension pots into the taxable estate for the first time. For many families, this compounds the impact of the APR/BPR cap.
What About AIM Shares?
AIM shares have been a popular IHT planning tool because qualifying AIM-listed companies attracted 100% business property relief after a two-year holding period. From 6 April 2026, this has changed significantly:
- AIM shares now receive only 50% BPR (down from 100%)
- This means an effective 20% IHT rate on AIM holdings, where previously it was 0%
- AIM share values count toward the £2.5 million combined allowance
If you hold AIM shares specifically for IHT purposes, do not panic-sell. The 50% relief still provides meaningful tax savings compared to non-qualifying assets that face the full 40% IHT rate. Review your portfolio with a qualified financial adviser before making changes.
For a full analysis, read our guide to AIM shares and inheritance tax from 2026.
Spouse APR/BPR Allowance Transfer
In December 2025, the government confirmed an important detail: the unused portion of the £2.5 million APR/BPR allowance can be transferred to a surviving spouse or civil partner. This mirrors the existing transferable nil-rate band mechanism.
How the Transfer Works
If the first spouse to die does not use their full £2.5 million APR/BPR allowance, the unused proportion can be claimed by the surviving spouse's estate. For example:
- First spouse dies with £1 million of qualifying assets → uses £1M of their £2.5M allowance → £1.5M unused
- Surviving spouse can claim the unused 60% (£1.5M ÷ £2.5M) of their own £2.5M allowance → extra £1.5M on top of their own £2.5M
- Surviving spouse's total available allowance: up to £4 million in this example
In the best case — where the first spouse used none of their APR/BPR allowance (for instance, because all assets passed to the surviving spouse under the spouse exemption) — the survivor could claim up to £5 million of combined APR/BPR relief.
What Should You Do Now?
If you own agricultural property, a business, or AIM shares, there are several steps worth considering now that these changes are in effect:
- Get a valuation: Understand the current market value of your qualifying assets. You cannot plan effectively without knowing whether you are above or below the £2.5 million threshold.
- Review ownership structures: For married couples, consider whether assets are held in a way that maximises both partners' APR/BPR allowances.
- Consider lifetime gifts: Gifting qualifying assets during your lifetime can remove them from your estate, subject to the seven-year rule. However, this has significant practical implications for farmers and business owners.
- Model the numbers: Use Estate Map's calculator to see exactly how the new rules affect your estate under different scenarios.
- Take professional advice: The interaction between APR, BPR, the nil-rate band, the RNRB taper, and the pension changes from 2027 is complex. A qualified tax adviser can identify planning opportunities specific to your situation.
Frequently Asked Questions
What is the new APR/BPR allowance from April 2026?
From 6 April 2026, APR and BPR are capped at a combined £2.5 million per person. The first £2.5 million of qualifying agricultural and business assets continues to receive full relief (100%). Any value above £2.5 million receives only 50% relief, meaning an effective inheritance tax rate of 20% applies to the excess.
Can spouses combine their APR/BPR allowances?
Yes. The unused portion of the £2.5 million APR/BPR allowance is transferable to a surviving spouse or civil partner. If the first spouse used none of their allowance, the survivor can claim up to £5 million in total.
When do the APR/BPR reform rules take effect?
The new rules took effect on 6 April 2026. Any death on or after this date is subject to the capped APR/BPR system. Deaths before 6 April 2026 are assessed under the previous unlimited relief rules.
Does the £2.5m cap apply to APR and BPR separately?
No. The £2.5 million allowance is a combined cap shared across both agricultural property relief and business property relief. If you have £2 million of qualifying farmland and £1 million of qualifying business assets, the first £2.5 million receives 100% relief and the remaining £500,000 receives 50% relief.
Model the APR/BPR Reform on Your Estate
Estate Map's calculator includes the April 2026 changes. Enter your agricultural and business assets to see exactly how the new rules affect your inheritance tax liability.
Calculate my IHT →This article is for educational purposes only and does not constitute financial advice. Agricultural property relief and business property relief rules are complex and depend on individual circumstances. Always consult a qualified financial adviser, solicitor, or chartered tax adviser before making estate planning decisions.