What the latest consultation means for you and your estate planning
Inheritance tax (IHT) has long been a complex area, especially for those with agricultural or business assets. Recent government proposals unveiled in the Autumn Budget 2024 are set to introduce significant changes to two key reliefs: Business Property Relief (BPR) and Agricultural Property Relief (APR). And while much of the public debate has focused on farmers and family businesses, it’s the implications for trusts that are now coming under scrutiny.At SLS Wills and More, we are closely monitoring these changes to ensure that our clients – individuals, families, and trustees – remain informed and protected.
What’s Changing?
From 6 April 2026, a new £1 million cap will apply to the combined value of property eligible for full 100% relief under BPR and APR. Once this threshold is exceeded, further qualifying property will only receive relief at 50%.
Previously, someone with £2 million in qualifying business property could pass that on entirely IHT-free. Under the new rules, £1,000,000 could become taxable (subject to the nil rate band and any spousal exemptions and would be taxed at 20% instead of 40%).
Critically, it seems, this cap is not transferable between married couples or civil partners, an issue that may require many people to revisit and revise their wills to avoid wasting relief.
Trusts in the Firing Line
The current government consultation, open until 23 April 2025, is focused specifically on trusts that contain business or agricultural assets. Here are the key takeaways:
- New Trust Entries: From April 2026, when placing qualifying assets into a relevant property trust, the amount of relief available will depend on the settlor’s £1m allowance, taking into account any prior gifts in the last seven years.
- Trust-Specific Allowances: Once a trust is created, it will have its own separate £1m cap applied to 10-year anniversary and exit charges.
- Grandfathering Rules: Trusts set up before 30 October 2024 are partially shielded. Relief will still be fully available if qualifying assets are removed from the trust before its first 10-year anniversary after 6 April 2026.
Practical Impacts for Our Clients
At SLS Wills and More, we understand that these changes could create practical and financial challenges:
- Valuation Matters More Than Ever: With relief now capped, market value valuations will become essential. Gone are the days when book value sufficed for IHT planning. This may mean specialist valuations are obtained in conjunction with your accountant.
- Increased Complexity for Trustees: Trustees will need to carefully track allowances and possibly coordinate across multiple trusts to avoid falling foul of anti-fragmentation rules, which aim to prevent the creation of multiple trusts to exploit the £1m cap.
- Families May Need to Act Fast: Where possible, there may be a short-term window to restructure existing trusts or extract assets before the changes bite.
How Can You Prepare?
These new rules don’t take effect until April 2026, but waiting until the last minute is a risk. Whether you have business assets, agricultural property, or use trusts as part of your estate planning, now is the time to review your arrangements.
If you’re a trustee or acting under a Lasting Power of Attorney, you’ll want to understand how these changes might affect your responsibilities. And if your will involves trusts or passes on business or farming property, it may need updating.
We’re Here to Help
At SLS Wills and More, we combine in-depth legal expertise with a personal approach to ensure your estate planning reflects both current law and future changes. We’re always happy to provide guidance on the latest developments – and we’ll help you take practical steps to safeguard your legacy.
📞 Call us on 01304 577998
📧 Email hello@slswillsandmore.co.uk
📍 Or visit us at Office 4, Garrity House, Miners Way, Aylesham, Canterbury CT3 3BF
And remember, we’re proud to support the community, donating 5% of our profits to local causes like Hypo Hounds, Wildwood Trust and Community Driving School CIC. When you plan with us, you’re also giving something back.
