The Government has confirmed a series of inheritance tax reforms (IHT) that will start on 6 April 2026. Freezing the £325,000 nil-rate band (NRB) and the £175,000 residence NRB until 2030 will already bring more estates into scope, but two further measures will reshape long-standing reliefs:
- Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at a combined £1 million, with 50% relief – an effective 20% tax – on the excess.
- The current exemption for inherited pension pots ends on 6 April 2027, bringing undrawn pensions fully into the estate.
HMRC collected a record £8.2 billion of IHT in 2024-25, up 10 % year-on-year (HMRC, 2025), and the Office for Budget Responsibility expects receipts to hit £14.3 billion by 2029/30 (OBR, 2025). Yet only 6% of estates currently pay the tax (HM Treasury, 2024). With the rules tightening, preparing for inheritance tax reforms now is the surest way to protect family wealth.
April 2026 at a glance
- The NRB stays at £325,000 until at least 5 April 2030.
- The £175,000 residence NRB remains frozen and still tapers away once an estate exceeds £2 million.
- APR + BPR: full relief up to £1 million; 50% relief above that.
- Pension pots move inside IHT from 6 April 2027.
These thresholds will not track inflation, so asset growth alone can trigger a liability.
Who is likely to pay more?
Property owners in high-growth areas, successful business founders and farming families will feel the impact first. Frozen thresholds mean that estates valued at today’s £1 million pay no IHT where allowances are transferred between spouses, but a modest 20% rise in asset values could create a £40,000 bill by 2026. For larger operations, the APR/BPR cap shifts tax from nil to an effective 20% on everything above £1 million – a significant cash call when working capital is often tied up in land or machinery.
Preparing for inheritance tax reforms: planning steps you can take
Holistic review: Start with a full balance-sheet review and a will health-check. We work alongside solicitors to align ownership structures with personal wishes. Clients can arrange a review through our IHT planning service.
Lifetime gifting: Potentially exempt transfers still fall out of the estate after seven years. Regular gifts from surplus income remain immediately exempt if properly recorded. Key records:
- Annual £3,000 exemption
- Small gifts of £250 per person
- Wedding gifts – £5,000 to children, £2,500 to grandchildren/great-grandchildren
Good record-keeping is essential – we provide a template as part of our client care pack.
Trusts: Interest-in-possession and discretionary trusts remain effective, but draft carefully after Finance Act 2025 changes to trustees’ reporting duties. Our trust specialists can model ten-year charges and exit charges so there are no surprises later.
Insurance: Whole-of-life cover, written in trust, can create a tax-free lump sum to pay the bill. Premium funding is often lower than the tax saved.
Reviewing wills and existing trusts
Many wills reference 100% APR or BPR. Update these clauses to reflect the new cap and partial relief. If you have a discretionary trust due to receive business or agricultural assets, consider appointing specific assets outright before the reforms bite. Timing matters: transfers after 30 October 2024 but before death in 2026 will be reassessed when the new rules start.
Protecting business and farm assets
Family companies and farms need a two-track approach:
- Corporate restructuring:
- Growth shares: allocate future value to younger generations.
- Family investment companies: move surplus cash outside trading entities to avoid non-qualifying assets diluting relief.
- Partnership or shareholders’ agreements: include “cash option” clauses so beneficiaries can sell to surviving partners, avoiding a forced sale on an IHT bill.
We are already working with several Scottish family farms to quantify the cashflow impact if 20% tax becomes payable on land held for generations. Early appraisal can avoid borrowing against land values in 2026.
Using lifetime gifts and cashflow planning
Cashflow planning:
- Annual reviews: Test the affordability of gifts against living expenses.
- Scenario modelling: Inflation, market volatility, care-cost stress tests.
- Pension draw-down strategy: Consider crystallising some pension savings before April 2027 where inheritance objectives outweigh income tax efficiency.
Our cashflow forecasting tool lets clients visualise these scenarios and track progress.
What to do between now and April 2026
- Book an IHT planning meeting.
- Collect asset valuations dated 5 April 2025 to benchmark growth.
- Where appropriate, complete transfers of business or agricultural property before the £1 million cap applies.
- Document surplus-income gifts each tax year.
- Keep pension beneficiaries’ forms up to date ahead of 2027.
Ready to secure your legacy?
By preparing for inheritance tax reforms well in advance of April 2026, you can stay in control of your estate and avoid unforeseen tax consequences when the new rules take effect. April 2026 may seem far off, but changes of this magnitude require early action – some estate planning measures (like certain lifetime gifts) need years to fully materialise. Starting your planning now means you’ll have the widest range of options available to safeguard your assets and take advantage of current reliefs while they remain available under existing rules.
Professional support can add significant value at this critical time. Inheritance tax rules are complex, and the upcoming reforms introduce new layers of consideration. Having an expert adviser by your side ensures you understand all the implications and opportunities specific to your situation. With over 50 years’ experience as a trusted UK accounting and audit firm, our team has guided generations of clients through changes like these. We can help you identify the right steps – whether it’s restructuring your business, exploring trust solutions, or adjusting your pension strategy – so you move forward with clarity and confidence.
Ultimately, acting promptly will put you in the best position to protect your legacy and minimise any avoidable tax for your family. If you have concerns about how these IHT changes could affect your circumstances, we encourage you to get in touch.
Contact our team today to arrange a personal estate planning review – with our support, you’ll be fully prepared for the April 2026 reforms and well-equipped to secure your estate’s future.