New Agricultural and Business Property Relief Allowance
Bright Insights: Post-Budget Analysis
The Chancellor has announced a key amendment to the inheritance tax reforms affecting Agricultural Property Relief (APR) and Business Property Relief (BPR), confirming that the newly introduced £1 million relief allowance will now be transferable between spouses.
Background to the October 2024 Reforms
In the October 2024 Budget, the Government introduced significant changes to APR and BPR. Under the new rules, the level of assets eligible for 100% relief from inheritance tax is capped at £1 million per individual.
As outlined in our previous article, this was a major shift from the longstanding position, and it raised several concerns within agricultural and business sectors. In particular, one controversial aspect of the original proposal was the non-transferability of the £1 million allowance. Unlike the Nil Rate Band and Residence Nil Rate Band, the APR/BPR allowance could not be passed to a surviving spouse.
Yesterday’s Announcement: Transferability Restored
In the recent Budget, the Chancellor confirmed that this element of the reforms will be revised. The £1 million APR/BPR allowance will now be fully transferable between spouses, aligning it with other major inheritance tax allowances.
This means that, where the first spouse does not use some or all of their allowance, the unused portion can now be transferred to the surviving spouse, removing the pressure to restructure estates purely to avoid losing relief.
Is This Enough?
While the change has been widely welcomed, many industry voices argue that it does not go far enough to mitigate the impact of the wider reforms. Capping relief at £1 million is expected to cause considerable difficulties for farming families and family-run businesses, where asset values often far exceed this threshold.
How Bright Solicitors Can Help
The Private Client team at Bright Solicitors is already working closely with clients in the agricultural and business community to review estate plans in light of these new rules. The transferability announcement is positive, but proactive planning remains essential to ensure families are not adversely affected when the wider changes come into force.
If you would like tailored advice or a review of your current arrangements, please get in touch with our Private Client team.
