New Inheritance Tax Rules to Impact Trusts and Family Businesses

What the latest Budget consultation means for you and your estate planning

Inheritance Tax has long been one of the most complex areas of estate planning, particularly for those with business or agricultural assets. Recent proposals announced in the Autumn Budget have introduced changes that could have a significant impact on how estates, trusts, and family businesses are planned for in the future.

At SLS Wills and More, we are closely monitoring these developments to ensure our clients across England and Wales remain informed and protected.

What is changing?

From 6 April 2026, a new £1 million cap will apply to the combined value of assets eligible for full 100 percent relief under Business Property Relief (BPR) and Agricultural Property Relief (APR).

Anything above this £1 million threshold will only qualify for relief at 50 percent.

Previously, it was possible for qualifying business or agricultural assets to pass entirely free of Inheritance Tax. Under the new proposals, this may no longer be the case.

For example, where someone owns £2 million of qualifying business assets, up to £1 million could potentially become taxable, subject to any available nil rate bands or spousal exemptions. Instead of attracting no tax, part of the estate could be taxed at an effective rate of 20 percent rather than 40 percent.

A key concern is that the £1 million allowance does not currently appear to be transferable between spouses or civil partners. This could result in valuable relief being lost if Wills are not reviewed and updated in good time.

Trusts are under increased scrutiny

New trust entries
From April 2026, when qualifying assets are placed into a relevant property trust, the available relief will depend on the settlor’s £1 million allowance, taking into account gifts made in the previous seven years.

Trust specific allowances
Once established, a trust will have its own £1 million cap applied to ten year anniversary charges and exit charges.

Grandfathering provisions
Trusts created before late October 2024 may benefit from transitional protection. Where qualifying assets are removed from the trust before its first ten year anniversary after April 2026, full relief may still apply.

These changes add a new layer of complexity for trustees and families who have relied on trusts as part of their long term estate planning.

What does this mean in practice?

These proposals may affect families and business owners in several ways:

Valuations matter more than ever
Accurate market value valuations are becoming increasingly important. Historic or book values may no longer be sufficient when calculating potential tax exposure.

More responsibility for trustees
Trustees will need to carefully monitor allowances and be mindful of anti fragmentation rules designed to prevent multiple trusts being used to maximise relief.

Time sensitive planning opportunities
There may be limited opportunities to restructure existing arrangements or extract assets before the new rules take effect.

How can you prepare?

Although these changes are not due to take effect until 2026, waiting until the last minute could limit your options.

You may wish to review your estate planning if you:

• Own a business or shares in a business

• Own agricultural property

• Have trusts as part of your Will or lifetime planning

• Act as a trustee or attorney under a Lasting Power of Attorney

Wills that include trusts or rely on Business Property Relief or Agricultural Property Relief may need updating to ensure they remain effective and tax efficient.

How SLS Wills and More can help

At SLS Wills and More, we combine technical expertise with a practical and personal approach. We work closely with clients, and where appropriate their accountants and financial advisers, to ensure estate planning reflects both current law and future changes.

If you are concerned about how the Budget may affect your estate, now is the time to take advice.

Contact us
Phone: 01304 577998
Email: [email protected]
Office 4, Garrity House, Miners Way, Aylesham, Canterbury CT3 3BF

Planning ahead can make all the difference. We are here to help you safeguard your legacy with clarity and confidence.