How Do the April 2026 IHT Changes Affect Succession Planning?

Inheritance tax planning plays a hugely important role in farm succession planning and business succession planning for family-owned farms and businesses.

Currently, agricultural property relief (APR) and business property relief (BPR) allow families to pass down property assets with little or no inheritance tax liability.

However, from 6 April 2026, the way that APR and BPR work is changing. Families will need to revisit their plans for succession and use of trusts to make sure that their business is still set up as tax-efficiently as possible.

If you’re concerned about how the changes may affect your family farm or business, then this article is for you. At Hibberts, our team of specialist agricultural solicitors and commercial law department have been helping families across Cheshire and Shropshire with succession planning and inheritance tax planning since 1799.

In this article, we explain what is changing on 6 April 2026, how it affects succession planning, and why you should review your existing trust arrangements as soon as possible.

IHT changes April 2026: A quick recap

What are the current rules?

APR and BPR are inheritance tax reliefs designed to support family-owned farms and businesses.

Currently, qualifying agricultural and business property can benefit from up to 100% inheritance tax relief. There is no cap on the amount of relief an individual can claim.

APR can be applied to qualifying agricultural land and buildings used for farming, while BPR covers qualifying assets like a trading company, shares, and certain business property, land, and machinery.

What are the new rules from 6 April 2026?

From 6 April 2026, a cap will be introduced on the amount of agricultural and business property eligible for 100% relief.

Key APR and BPR changes include:

• 100% APR or BPR will only apply to the first £2.5 million of qualifying agricultural and business assets.
• The £2.5 million cap will apply to both individuals and trusts.
• Any qualifying assets above the £2.5 million cap will receive 50% inheritance tax, bringing the tax rate down to 20%.

The £2.5 million allowance will apply per individual, and any unused allowance can be transferred to a spouse or civil partner. This means there is still the potential for a couple to pass down up to £5 million of qualifying agricultural property or business property assets without paying inheritance tax.

How do the April 2026 IHT changes affect succession planning?

Farming businesses are known for being asset-rich but cash-poor. For decades, APR has helped make it more financially viable for farming families to pass assets between generations rather than be forced to sell land or business assets after someone dies.

Although the new rules will allow farms and family businesses to pass down up to £2.5 million of qualifying assets per individual, some families will still face inheritance tax liabilities that they would not have under the old rules. In some circumstances, this could put unexpected financial pressure on families unless they review and amend their succession plan.

Review your succession plans

First, you should check that your agricultural or business assets still qualify for IHT relief and then work out how much relief you will be eligible to under the reformed rules.

Key areas of your succession plan to review include:

• Ownership structures
• Partnership and shareholder agreements
• Wills
• Lifetime gifting strategies

Consider transferring assets

Early succession planning will become more important than ever, as some individuals may find they benefit from gifting assets to other family members well before their death rather than after. Gifts are considered potentially exempt transfers (PETs). Provided the person gifting the asset then lives for seven years after making the gift, the transferred assets become 100% exempt from inheritance tax.

Every family, farm, and business is different, so it’s important to seek tailored legal advice before making any changes to your business or plans. Contact our team here at Hibberts Solicitors to receive succession planning advice tailored to the structure of your business, the value of your estate, and your family’s long-term plans.

How do the April 2026 IHT changes affect trusts?

Trusts play an important role in succession planning and reducing IHT liability for family-owned farms and businesses. Putting money into trusts offers more control over how assets are distributed between beneficiaries after your death. In some circumstances, placing assets into a trust can also remove them from the value of the estate for IHT purposes, provided the person survives for seven years after making the transfer.

From 6 April 2026, the £2.5 million cap will also apply to the combined value of relievable agricultural and business property in trusts. Any value above the threshold will only qualify for 50% relief.

If you already have trusts set up, it’s important to review how they are structured as soon as possible. It’s important to note that different rules will apply to different trusts depending on the type of trust you have and when it was created.

Review existing trusts

Trustees should review the value of assets held within trusts, assess whether those assets qualify for APR or BPR, and how much IHT relief they are eligible to under the new rules.

In certain circumstances, those with trusts that were created before 30 October 2024 may wish to consider transferring qualifying business assets out of the trust while 100% relief is still available.

Creating new trusts

When creating trusts after the new rules have come into effect, you will need to carefully consider how assets are divided between individuals and trusts to make the most efficient use of the available allowances. In some cases, it may be more efficient to make multiple transfers over a number of years rather than placing a large amount into a trust in one go. You’ll also need to think carefully about the right type of trust to use, as some trusts incur inheritance tax charges every ten years, as well as when the assets leave the trust.

Preparing your succession plan for the April 2026 IHT changes

If you haven’t already, now is a good time to review your succession plan, trust structures, and wills, as arrangements that were previously tax-efficient may no longer be so under the new rules.

Inheritance tax, succession planning, and trusts are all very legally complex, and every family and business structure is different, so it’s important to always get specialist legal advice before making any changes.

• Assess the value of your assets and eligibility for IHT relief under the new rules.
• Review your wills, existing trusts, and succession plan.
• Assess the liquidity of your estate and whether you have enough assets to meet your tax liability.
• Consider transferring assets via lifetime gifting.
• Get tailored advice from Hibberts’ inheritance tax and succession planning Solicitors in Cheshire.

Speak to Hibberts Solicitors about trusts and succession planning

Failing to review how the changes to inheritance tax rules could affect your succession plans could have devastating and far-reaching consequences for farming families and business owners.

At Hibberts Solicitors, we are here to help businesses, farmers, and landowners across Nantwich, Whitchurch, Tarporley, Crewe, and wider Cheshire and Shropshire to review succession plans and ensure that their estate is structured as tax efficiently as possible, helping to safeguard family wealth and businesses for future generations.

For tailored advice, contact our team of inheritance tax solicitors in Cheshire today by calling 01270 624 225 or emailing enquiries@hibberts.com to arrange a free consultation.