On 23 December 2025 the Government announced that the £1 million allowance for 100 percent agricultural property relief (APR) and business property relief (BPR) for inheritance tax (IHT) will now be increased to £2.5 million from 6 April 2026. Relief will remain limited to 50 percent on the amount of qualifying assets valued above this threshold resulting in an effective IHT charge of 20 percent (i.e., half the standard 40 percent IHT rate). Details of the announcement were made in a news release published by HM Treasury on 23 December 2025. Having lobbied heavily on this issue since the 2024 Budget and throughout 2025, the Institute issued a Press Release on 23 December reacting to the announcement noting this welcome mitigation including the confirmation of transferability of the allowance between spouses. A timeline of all formal lobbying and Press Releases on this issue by the Institute since it was announced in 2024 is set out below.
When combined with the transferability of any unused amount of the allowance between spouses and civil partners, another Institute recommendation that was announced at the Autumn Budget in November 2025, this effectively means that a couple will have a combined allowance of £5 million before any unused amount of their transferable nil rate band is taken into account. This would potentially increase the overall 100 percent amount on which no IHT will be payable to £5.65 million should their full £325,000 nil rate band be unused. As a result, many farms and family owned businesses in Northern Ireland will continue to receive 100 percent APR and BPR and not have any IHT liability, protecting the succession plans of these businesses for the next generation.
HMRC has published an updated policy paper on this issue which also confirms that if the first spouse or civil partner’s death was before 6 April 2026, it will be assumed that the entirety of their £2.5 million allowance is unused and thus will be available for transfer to the surviving spouse or civil partner. HMRC has also published an explanatory note on the Government’s tabled amendment for this change. Clause 62 and Schedule 12 of Finance (No. 2) Bill have since been amended and the full amendment papers have been published.
Finance (No. 2) Bill has now had its second reading in the House of Commons; the next stage is Committee of the whole House which is scheduled to take place today, 12 January 2026.
We also understand that during an exchange in Parliament between the Exchequer Secretary (XST) Dan Tomlinson and Robin Swann MLA, it has been suggested that the ability to transfer individual allowances to a spouse/civil partner may potentially also apply to intergenerational farms owned by other family members. The Hansard exchange discussing this has also been published. At present, this is not fully clear and requires Government clarification which we will monitor.
The Hansard exchange also confirms that the Government now expects to raise around £300 million from this change. The expected tax take by 2029/30 from the original policy announced in the 2024 Autumn Budget was £520 million. It remains unclear if the Chancellor intends to announce new tax increases in the Spring Forecast to cover this new deficit. However this may not be needed given the £22 billion fiscal headroom provided by the most recent Budget.
The full timeline of formal Institute representations and Press Releases on this issue since the Autumn Budget in 2024 is as follows:
- November 2024: meeting with HMRC on Autumn Budget 2024,
- December 2024: press release on APR and BPR,
- April 2025: letter to XST on APR and BPR,
- April 2025: response to consultation on APR and BPR,
- July 2025: press release on APR and BPR,
- September 2025: meeting with local Government on APR and BPR,
- October 2025: submission to House of Lords Finance Bill Sub-Committee on APR and BPR,
- October 2025: Autumn Budget 2025 pre-Budget submission,
- October 2025: evidence session by Leontia Doran to House of Lords Finance Bill Sub-Committee,
- November 2025: Autumn Budget Press Release, and
- December 2025: meeting with HMRC on Autumn Budget 2025.
LOADING...