From April 2026, significant changes to Inheritance Tax (IHT) reliefs on business and agricultural assets will take effect. For individuals and families whose wealth includes trading businesses, farmland, or other qualifying assets, these changes may lead to larger tax liabilities on their estates – unless careful planning is undertaken now.

Currently, under Business Relief and Agricultural Relief rules, qualifying assets can receive up to 100% relief from IHT. This has enabled many families to pass on substantial value without triggering a tax charge. However, the government has confirmed that from April 2026, this full relief will only apply to the first £1 million of eligible assets. Any value above this threshold will receive only 50% relief. This shift could have a material impact on the estates of those with valuable land holdings or business shares.

What This Means in Practice

For example, if an estate includes £2 million of qualifying agricultural land, under current rules the full amount may be exempt from IHT. From April 2026, only £1 million would be fully exempt, while the remaining £1 million would be taxed at 20% (after 50% relief), resulting in a potential IHT bill of £200,000 on just that portion of the estate.

Such figures underline the importance of reviewing your estate planning strategy now, well before the changes come into force.

Strategies to Consider Now

There are a number of forward-looking strategies that can help mitigate the potential impact of these upcoming rules:

1. Lifetime Gifting

Transferring assets during your lifetime can be an effective way to reduce the value of your estate. Provided you survive for seven years after making the gift, it may fall entirely outside your estate for IHT purposes. This approach can be especially useful for business owners or landowners who are confident in their succession plans.

2. Trust Planning

Trusts remain a versatile tool for wealth preservation and transfer. They allow you to maintain a degree of control over how assets are used, while potentially reducing the taxable value of your estate. Trusts can be complex and must be structured carefully to align with your goals and the evolving tax environment.

3. Pensions and ISAs

ISAs are subject to IHT on death and from 2027, pensions will also be subject to IHT. This makes pensions a valuable component of estate planning. In some cases, it may be beneficial to preserve pension savings while drawing on other, more taxable assets. Structuring your investments tax-efficiently can have long-term benefits for your beneficiaries.

4. Asset Reorganisation

Where appropriate, it may be worth considering whether business or agricultural assets can be restructured to maximise the reliefs available. This could involve changing the ownership structure or redistributing assets among family members.

Timing Is Critical

April 2026 may feel distant, but in estate planning terms, it is relatively soon. Some strategies, like gifting or trust creation, can take time to implement and benefit from. Acting now gives you the best chance to make the most of the current reliefs before they are scaled back. Early planning also ensures you are not making decisions under time pressure, allowing for a more thoughtful and tailored approach.

Why Choose Fogwill & Jones

At Fogwill & Jones, we understand that every client’s situation is unique. Our advisers have deep experience in helping clients navigate complex tax rules, often in coordination with legal and accountancy professionals. Whether you’re managing a family farm, a private company, or a diverse portfolio, we will work with you to develop a strategy that reflects your values and objectives.

We believe in empowering our clients through clarity and foresight. Our inheritance tax planning service is designed to give you peace of mind – ensuring your wealth is protected, your loved ones are provided for, and your legacy endures.

If your estate includes business or agricultural assets, we strongly recommend starting the conversation today. Contact us to arrange a consultation and begin planning with confidence.