IHT News: April 2026 — APR/BPR Reform Live
The biggest inheritance tax reform in years is now in effect. From 6 April 2026, the APR/BPR cap limits relief on agricultural and business assets, AIM shares lose half their IHT protection, and the countdown to pension inclusion in April 2027 has begun. Here is what has changed and what it means for your estate.
April 2026 — What Changed
APR/BPR Reform Now Live
As of 6 April 2026, the APR/BPR reform is in effect. The key changes:
- A combined £2.5 million per person cap on the value of assets qualifying for 100% APR or BPR
- Qualifying assets above £2.5 million receive 50% relief instead of 100%
- AIM shares receive 50% BPR only (regardless of value)
- The £2.5 million cap is shared between APR and BPR — you cannot claim £2.5 million of each
| Asset type | Relief before April 2026 | Relief from April 2026 |
|---|---|---|
| Farm (APR qualifying) — first £2.5M | 100% | 100% |
| Farm (APR qualifying) — above £2.5M | 100% | 50% |
| Trading business (BPR) — first £2.5M | 100% | 100% |
| Trading business (BPR) — above £2.5M | 100% | 50% |
| AIM shares (any value) | 100% | 50% |
| Quoted shares (controlling interest) | 50% | 50% (no change) |
Summary of relief changes from 6 April 2026
The cap applies to deaths on or after 6 April 2026. If you are administering an estate where death occurred before this date, the old rules (unlimited 100% relief) still apply.
AIM Shares: 50% Relief in Effect
AIM-listed shares held for two or more years previously qualified for 100% business property relief, making them completely free of IHT. From April 2026, the relief is halved to 50%.
This means an AIM portfolio now faces an effective IHT rate of 20% (50% relief applied first, then 40% tax on the remaining half). For a £500,000 AIM portfolio, that is £100,000 in IHT that previously would have been zero.
Investors should review whether AIM shares still make sense as an IHT planning tool compared to alternatives such as life insurance in trust or systematic gifting.
Pension IHT 2027: The Countdown
With the APR/BPR reform now live, attention turns to the next major change: the inclusion of unspent defined contribution pension pots in the taxable estate from 6 April 2027.
Key developments to watch:
- Draft legislation: Expected during 2026. This will confirm the detailed rules, including how the tax will be collected from pension administrators
- RNRB interaction: A pension pot pushing an estate above £2 million could trigger the RNRB taper, costing an additional £175,000 (or £350,000) in lost allowance
- Planning window: There are still 12 months to consider strategies such as pension drawdown, phased gifting of surplus income, and restructuring beneficiary nominations
Our pensions and IHT 2027 guide covers the impact in detail with worked examples.
Notable Planning Opportunities
Despite the tighter rules, several planning strategies remain effective:
- Gifting exemptions: Annual exemptions (£3,000/person), small gifts (£250/person), and the normal expenditure from income exemption are unchanged and immediately effective
- Seven-year gifts: Larger gifts as PETs still fall out of the estate after seven years
- Life insurance in trust: Remains a simple way to keep policy proceeds outside the estate
- Charitable giving: Leaving 10% of the net estate to charity still reduces the IHT rate from 40% to 36%
- Deed of variation: Beneficiaries still have two years from death to redirect inheritances for tax purposes
Looking Ahead
The next 12 months will be critical for estate planning:
- Summer 2026: Draft pension IHT legislation expected, which will clarify the detailed rules for April 2027
- Autumn 2026: Potential Budget announcements — any further IHT changes would likely be signalled here
- April 2027: Pension pots enter the estate — families should be planning now, not waiting for the deadline
Action now: If you have not reviewed your estate plan since the Autumn Budget 2024, do so before the end of the current tax year. The combination of the APR/BPR cap, frozen thresholds, and upcoming pension changes could significantly increase your family's IHT bill.
Frequently Asked Questions
What changed for inheritance tax on 6 April 2026?
The combined APR and BPR allowance is now capped at £2.5 million per person. Qualifying agricultural and business assets above this cap receive only 50% relief instead of 100%. AIM shares now receive 50% BPR only. The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain unchanged.
Does the APR/BPR cap apply to deaths before 6 April 2026?
No. The cap applies only to deaths on or after 6 April 2026. Estates where the death occurred before this date continue to receive full APR and BPR relief without a cap.
When are pensions included in estates for IHT?
Unspent defined contribution pension pots will be included in the taxable estate from 6 April 2027 — one year after the APR/BPR reform. Draft legislation is expected during 2026, with the final rules confirmed before April 2027.
Can married couples each claim a £2.5 million APR/BPR allowance?
Yes. The £2.5 million cap is per person. A married couple can potentially shelter up to £5 million of qualifying agricultural and business assets between them. However, the unused allowance does not transfer between spouses in the same way as the nil-rate band.
What should I do now the APR/BPR reform is live?
Review your estate plan with a qualified adviser. If your qualifying assets exceed £2.5 million, consider whether lifetime gifting, restructuring, or other planning could reduce the impact. Use Estate Map's calculator to model different scenarios under the new rules.
Model Your Estate Under the New Rules
Estate Map's calculator is fully updated for the April 2026 APR/BPR cap. Enter your estate details and see exactly how the reform affects your IHT liability.
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