What the new draft legislation on APR and BPR could mean for you
Earlier this week, the government released draft legislation in relation to the proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR). This draft legislation provided further detail on the changes to these Inheritance Tax reliefs, which were announced in the Autumn Budget 2024. While these rules are still not yet final, they give us a clearer picture of what’s likely to come.
To recap on the position announced in the Autumn Budget 2024:
29th July 2025
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Stephen Martin See profile -
Jess Marshall See profile
Introduction of a £1 million allowance
Effective from 6 April 2026, the 100% BPR and APR rate will be capped at £1 million per individual. Any qualifying business assets exceeding this threshold will receive a reduced relief rate of 50%.
Impact on trusts
For relevant property Trusts, each Trust will have its own £1 million allowance for assets qualifying for 100% relief on each ten-year anniversary charge or exit charge. However, Trusts established after 30 October 2024 by the same settlor must share this allowance.
No transfer of unused relief between spouses
Sadly, the draft confirms that any unused APR or BPR allowance on first death won’t be passed on to a surviving spouse. This means planning ahead as a couple will remain essential.
Good news for Trusts
Plans to change how related assets in multiple Trusts are valued (which could have created extra tax) are not going ahead. That’s a welcome relief.
Allowance to rise with Inflation
Starting in 2030/31, the £1 million cap will rise with inflation. This wasn’t previously announced, so it’s a positive surprise (even if modest).
One of the main areas of uncertainty following the initial announcement was around how the £1 million APR/BPR allowance for Trusts would work in practice. The new draft legislation gives some welcome detail. Here’s what we know so far:
Allowance set at the start
The amount of the allowance available to a Trust created after 30 October 2024 is based on the value of qualifying assets when the trust is created. If those assets grow in value, the increase could be exposed to tax.
Changing assets in the trust could affect relief
The allowance allocated to the Trust ignores subsequent events. If non-qualifying assets are replaced with APR/BPR assets later on, the Trust may not have an allowance for these assets to be covered by 100% relief. Selling qualifying assets without replacing them with other qualifying assets may also mean the allowance allocated to a Trust is wasted.
Timing matters
The allowance will generally only be reduced by transfers after October 2024 – unless those assets are also taken out of the Trust before 6 April 2026.
Older trusts get a better deal
Trusts set up before October 2024 and holding APR or BPR assets at that time will be eligible for the full £1 million allowance. This could be an opportunity if you already have such arrangements in place.
Even though the rules aren’t yet final, they’re starting to take shape, and that means it’s a good time to start thinking ahead:
✅ Review your Trusts or estate plans in light of these potential changes
✅ Look at how your assets are currently held and whether they qualify for APR/BPR
✅ Estimate your Inheritance Tax position under the draft rules
✅ Explore planning options now, so you’re ready to act once the legislation is confirmed
If you’d like to talk through what these changes could mean for you, we’re here to help. We’ll be happy to arrange a chat, get in touch.