Inheritance Tax Planning Before April 5th 2026 Deadline
What is the April 5th 2026 inheritance tax deadline?
From April 6th 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at £2.5 million combined. Gifts made before April 5th 2026 can still receive unlimited relief. This is a one-time opportunity for families with farms or businesses.
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This is a one-time opportunity. Assets transferred or restructured before April 5th 2026 can still receive unlimited APR and BPR relief. After April 6th, relief is capped at £2.5 million.
Time remaining: Consult a professional immediately if you own a farm or business worth over £2.5 million.
What's Changing on April 6th 2026?
Current Rules (Until April 5th)
- ✅ Unlimited APR for agricultural property
- ✅ Unlimited BPR for business assets
- ✅ AIM shares: 100% relief
- ✅ No cap on combined relief
New Rules (From April 6th)
- ❌ APR + BPR combined cap: £2.5m per person
- ❌ Married couples: £5m combined maximum
- ❌ Assets above cap: Only 50% relief
- ❌ Effective IHT rate of 20% on excess
Example: Farm Worth £5 Million
Before April 6th (Current Rules):
Full £5m receives 100% APR relief
Inheritance tax: £0
After April 6th (New Rules):
First £2.5m: 100% relief
Next £2.5m: 50% relief (£1.25m taxable)
Inheritance tax: £500,000 (40% of £1.25m)
Who This Deadline Affects
Farm Owners
Agricultural Property Relief (APR) applies to:
- Agricultural land and buildings
- Farmhouses (if character-appropriate)
- Growing crops and livestock
- Farm cottages for workers
If your farm is worth over £2.5 million (£5m for married couples), you'll pay significantly more IHT after April 6th.
Business Owners
Business Property Relief (BPR) applies to:
- Trading companies and shares
- Business assets used in the company
- Unlisted shares (including AIM)
- Partnership interests
Family businesses worth over £2.5 million will face a 20% effective IHT rate on the excess after April 6th.
AIM Investors
Alternative Investment Market (AIM) shares currently receive 100% BPR after 2 years' ownership. The new £2.5 million cap will apply to AIM portfolios as well.
Combined APR and BPR
The £2.5 million cap is combined across both APR and BPR. If you own both a farm (APR) and a business (BPR), the total relief is capped at £2.5 million, not £2.5 million for each.
What You Can Do Before April 5th
Option 1: Gift Assets Now
Transfer ownership of farm or business assets to the next generation before April 5th. These transfers will qualify for unlimited APR/BPR under current rules. Understanding the 7-year gifting rule is crucial when planning lifetime gifts.
How it works:
- Gift made before April 5th = unlimited relief applies immediately
- Must survive 7 years for gift to be fully exempt from your estate
- If you die within 7 years, the gift uses unlimited APR/BPR (not the new capped version)
- Recipients may need to hold assets to maintain relief
⚠️ Tax implications:
- Capital Gains Tax may apply on transfer
- Consider Gift Hold-Over Relief to defer CGT
- Income tax if you continue to benefit from assets
Option 2: Restructure Ownership
Change how assets are owned to maximise relief under current rules. This might involve transferring assets between spouses or creating new ownership structures.
Strategies to consider:
- Transfer assets to spouse to use both £2.5m allowances (£5m total for couples)
- Create partnership structures to spread ownership across family
- Separate business and investment assets
- Review company structures (trading vs investment companies)
Important: Restructuring must be completed and documented before April 5th. Allow time for legal work and valuations.
Option 3: Review Your Will and Estate Plan
Update your will to account for the new £2.5 million cap and ensure your estate plan maximises available reliefs.
What to review:
- Current will provisions - do they still make sense with capped relief?
- Use of nil-rate bands (£325,000 each)
- Residence nil-rate band (£175,000 each for family home)
- Spouse exemption planning
- Trust structures for excess assets
- Life insurance to cover potential IHT bills
Timeline: What to Do This Week
If you own farm or business assets worth over £2.5 million, act now. Professional advice takes time, and any transfers must be completed before April 5th.
Week of Feb 3-9: Urgent Consultation
- Book emergency appointment with solicitor and/or accountant
- Gather asset valuations and ownership documents
- List all assets that qualify for APR or BPR (farms, businesses, AIM shares)
Week of Feb 10-16: Valuation and Planning
- Get professional valuations for farm/business assets
- Calculate potential IHT under current vs new rules
- Decide on strategy (gift, restructure, or plan for tax)
Week of Feb 17-23: Make Decisions
- Finalise action plan with advisers
- Draft legal documents (deeds of gift, partnership agreements)
- Consider Capital Gains Tax implications and reliefs
Week of Feb 24-Mar 2: Execute Transfers
- Complete transfers and restructuring
- Sign all legal documents
- Register changes (Land Registry, Companies House)
Week of Mar 3-9: Documentation
- File any necessary paperwork with HMRC
- Update insurance and bank accounts
- Keep detailed records of all transfers
By April 5th: Final Deadline
- Ensure all transfers are legally complete
- All documents signed and registered
- Keep evidence that transfers occurred before April 6th
Get Professional Advice
⚠️ This is complex tax planning - do not attempt without qualified professional advice
Inheritance tax, capital gains tax, and gift planning interact in complicated ways. Mistakes can cost hundreds of thousands of pounds. Professional fees are a small price compared to potential tax savings.
Find a STEP Member (Society of Trust and Estate Practitioners)
STEP members specialise in inheritance tax and estate planning.
Website: www.step.org/find-a-member
Find an Agricultural Property Specialist
Solicitors and accountants who specialise in farm succession and APR planning.
NFU Legal Services: www.nfumutual.co.uk/legal-services
CLA (Country Land and Business Association): www.cla.org.uk
HMRC Inheritance Tax Helpline
Phone: 0300 123 1072
Hours: Monday to Friday, 9am to 5pm
Note: HMRC cannot give personalised tax advice but can explain the rules and how they apply generally.
Important Considerations
Capital Gains Tax
Gifting assets during your lifetime may trigger Capital Gains Tax. However, Gift Hold-Over Relief may allow you to defer CGT until the recipient sells the asset. Discuss with your accountant.
7-Year Rule Still Applies
Gifts made before April 5th 2026 will use unlimited APR/BPR, but you still need to survive 7 years for the gift to be fully exempt from your estate. If you die within 7 years, the gift is included in your estate but receives the unlimited relief (not the new capped version).
Retaining Control
If you gift assets but continue to benefit from them (e.g., living rent-free in a gifted farmhouse), this may create a "gift with reservation of benefit" and lose the IHT advantage. Structure carefully with professional advice.
Timing of Transfers
Transfers must be legally complete before midnight on April 5th 2026. Allow sufficient time for legal work, registrations, and any required approvals. Don't leave it to the last minute.
What If You Do Nothing?
If you own qualifying assets worth over £2.5 million and take no action before April 5th:
- ❌Higher IHT bills: Assets above £2.5m receive only 50% relief, meaning 20% effective IHT rate on the excess
- ❌Forced asset sales: Your family may need to sell farm/business assets to pay the IHT bill
- ❌Lost opportunity: This is a one-time chance to use unlimited relief - it won't be available again
- ❌Business continuity risk: Large IHT bills can threaten the viability of family farms and businesses
For a £5 million farm, doing nothing means your family faces a £500,000 IHT bill instead of £0. That's £500,000 that could have been saved with proper planning before April 5th.
Sources and Further Reading
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