The Government’s decision to increase Agricultural Property Relief (APR) and Business Property Relief (BPR) thresholds to £2.5m per individual was welcomed by many farming families and business owners. For a large number of estates, the changes reduce immediate concerns around inheritance tax (IHT) exposure and succession planning.
However, for larger farming and family business estates, particularly those with substantial land holdings, diversified operations or multiple generations involved in ownership, potential IHT exposure remains a very real consideration.
From April 2026, qualifying assets continue to receive 100% APR or BPR relief up to £2.5m per individual, with qualifying assets above this threshold receiving relief at 50%, effectively creating a 20% IHT charge on the balance over £2.5m.
For estates significantly above the threshold, early planning is still essential to help protect both family wealth and long-term business continuity.
Lifetime gifting remains an important consideration
For some families, lifetime gifting may form part of a wider succession and tax planning strategy.
Assets gifted more than seven years before death can fall outside the estate for IHT purposes under the potentially exempt transfer (PET) rules. Gifts made within the seven-year period may still benefit from taper relief, depending on timing and circumstances.
However, gifting assets such as farmland, shares or trading interests is rarely straightforward. Alongside potential Capital Gains Tax implications, families must carefully consider wider commercial and operational impacts, including whether the next generation is ready to take on ownership and responsibility.
These are often sensitive conversations, but they are an essential part of long-term succession planning. A structured approach, aligned with both family objectives and the future needs of the business, is key.
The role of trusts in estate planning
Trust structures can also play an important role for larger estates, particularly where families wish to pass assets to future generations while retaining an element of control or flexibility.
Discretionary trusts, for example, can allow assets to be held for beneficiaries without providing an immediate entitlement. This may be beneficial where beneficiaries are younger, where future family circumstances may change or where families want flexibility around future distribution decisions.
However, trusts require careful ongoing management. The interaction between trust structures and relief eligibility can be complex, particularly where qualifying business or agricultural status may change over time. Regular review is therefore essential.
Family investment companies and partnership structures
For some larger estates, restructuring ownership through family investment companies (FICs) or formal partnership arrangements may provide longer-term succession planning opportunities.
Family investment companies can allow the founding generation to retain control through voting rights, while gradually transferring economic value to children or grandchildren over time. Similarly, partnership structures can support succession within farming businesses by allowing profits and capital interests to be shared in a controlled and tax-efficient way.
While these structures are not appropriate for every family or business, they may be worth exploring where estates sit materially above the available relief thresholds.
Looking beyond APR and BPR alone
While much of the recent focus has centred on APR and BPR changes, IHT planning should never be viewed through a single lens.
Effective planning often involves considering multiple reliefs, allowances and succession structures together to build a complete picture of the family’s long-term tax position and commercial objectives.
Every business, family and estate structure is different, meaning there is rarely a one-size-fits-all solution.
Planning early creates more options
Families should avoid leaving planning discussions until the last minute. The most effective strategies, particularly those involving gifting, restructuring or succession planning, can take significant time to implement properly. Early advice provides greater flexibility, more planning opportunities and the ability to structure arrangements carefully around the long-term future of the business.
For more information on inheritance tax planning, APR and BPR relief, or succession planning for farming and family business estates, please contact David Herd, Group Partner, or Gill Molloy, Group Tax Partner, on 0161 703 2500 or email David.Herd@championgroup.co.uk or Gill.Molloy@championgroup.co.uk.
