UK BPR and APR Changes from April 2026: What the £1 Million Cap Means for You
July 29, 2025
New Rules for BPR and APR: The £1m Cap Is Here to Stay
After months of anticipation, the UK government has finally published draft legislation detailing how business property relief (BPR) and agricultural property relief (APR) for inheritance tax will change from April 2026.
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The headlines?
A £1 million cap per individual for full relief, a partial fallback at 50%, and very little movement from the original Budget announcement in October 2024.
For advisers, business owners, and trustees, this is the shape of things to come and the planning window is narrowing.
What’s changing?
Each individual will have a £1 million lifetime allowance for 100% BPR/APR. Any qualifying value above that cap will attract only 50% relief.
The allowance will refresh every 7 years, but the draft legislation confirms that failed PETs and CLTs will reduce what’s left when you die.
Trusts have their own separate regime. Each relevant property trust will receive an allowance, refreshed every 10 years, which determines how much 100% relief applies on IHT events (e.g. ten-year anniversaries, exits).
Transitional rules apply to pre-2024 settlements. And yes, some trusts will now face IHT for the first time.
Any major concessions?
Not really.
Despite lobbying from all corners including industry bodies, estate planners, landowners, the government is largely sticking to its plan:
The £1 million cap remains fixed, although from 2030 it could be increased with CPI. But it’s not automatic as iit needs a statutory instrument, and we all know how that played out with the nil-rate band (£325,000 since 2009).
The allowance is not transferable between spouses. Despite many calls to allow this, the government concluded that it “would carry an Exchequer cost” and declined.
Proposals to split the allowance across chosen assets (e.g. during a CLT) were rejected as unworkable. Instead, the cap will be used up chronologically.
Suggestions to apply anti-fragmentation valuation rules were partly accepted. Trusts created by the same settlor will have their caps applied in order, but no valuation aggregation across trusts will apply.
What now?
Time for action.
Here are five key planning areas and some key questions to reflect on:
Model your IHT exposure:
How much would be payable under the new regime? Is your Will structured to preserve the 100% cap? Do your beneficiaries have liquidity?
Consider trusts:
A CLT now could still attract full relief if completed before April 2026. But after that, only £1 million qualifies at 100% and 10-year charges will need managing.
Review old trusts:
Will they have sufficient cap available? Can the IHT be funded? What do the trust documents say about winding up?
Gifting:
Is now the time to pass value to the next generation? If so, review company articles, shareholder agreements and estate plans for those receiving the asset.
Insurance:
If your estate faces an unavoidable IHT bill, life cover may still be a useful (and tax-efficient) tool.
Final thoughts
- The publication of draft legislation confirms that this isn’t just a consultation idea… it’s happening.
- From April 2026, £1 million is the limit for full relief, and everything above that will be in play.
- Planning early may make the difference between an IHT bill and a preserved legacy.
Get clear on what the £1m BPR/APR cap means for you
The new rules for Business Property Relief and Agricultural Property Relief are now in black and white — and from April 2026, anything above £1 million will no longer qualify for full relief.
If you're a business owner, landowner, trustee or adviser, now is the time to review your position.
We can help you:
- Assess how the new cap will impact your estate or your clients
- Make use of available reliefs before April 2026
- Restructure trusts and gifting strategies effectively
- Prepare for IHT charges that may now apply for the first time
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We support individuals, families and advisers with inheritance tax planning across the UK and internationally.
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