From 6 April 2026, the amount of a business or farm that can pass free of inheritance tax under the reformed reliefs is capped by a new 100% relief allowance, with a 50% rate on qualifying value above it (gov.uk, as at July 2026, subject to change).
This piece sets out the published figures behind that change and what they may mean for family businesses. It draws on HM Revenue & Customs data rather than opinion, and every number carries its source. For the wider rules on business property relief, and how the relief sits within Inheritance Tax Explained, see the linked guides. Figures are current as at July 2026 and are subject to change.
What is changing, and when
From 6 April 2026, business property relief and agricultural property relief share a single 100% relief allowance of £2.5 million per person. Qualifying value within the allowance keeps 100% relief; qualifying value above it moves to 50% relief (gov.uk, as at July 2026, subject to change). The allowance was originally proposed at £1 million and raised to £2.5 million on 23 December 2025.
The allowance is transferable between spouses and civil partners, so a couple may pass up to £5 million of qualifying business or agricultural property between them before the 50% rate applies, on top of the nil-rate bands (gov.uk news, as at July 2026, subject to change). Shares admitted to trading but not listed, such as many AIM holdings, move to 50% relief regardless of the allowance (gov.uk, as at July 2026, subject to change).
Key figures at a glance
The reform introduces a shared £2.5 million allowance and a 50% rate above it, sitting alongside the frozen nil-rate bands and the 40% standard rate. Each row below is a published figure with its source and reference period. Numbers are current as at July 2026 and are subject to change.
| Figure | Level | Source & period |
|---|---|---|
| 100% relief allowance (BPR and APR combined) | £2.5m per person, from 6 April 2026 | gov.uk, as at July 2026 |
| Relief on qualifying value above the allowance | 50% | gov.uk, as at July 2026 |
| Combined couple allowance (transferable) | Up to £5m | gov.uk news, as at July 2026 |
| Originally proposed allowance (raised 23 Dec 2025) | £1m | gov.uk news, as at July 2026 |
| Estates paying more IHT, 2026 to 2027 | Up to 1,100 (UK) | HMRC, 2026 to 2027 |
| Standard inheritance tax rate | 40% | gov.uk, as at July 2026 |
| Nil-rate band (frozen to 2030-31) | £325,000 per person | gov.uk, as at July 2026 |
| Cost of business property relief, 2021 to 2022 | £1,050m (about £185m from AIM shares) | HMRC via gov.uk, 2021 to 2022 |
All figures as at July 2026 and subject to change. Sources are listed in full in the methodology section below.
Who is affected
HM Revenue & Customs expects up to 1,100 estates across the UK to pay more inheritance tax in 2026 to 2027 as a result of the combined reforms, made up of up to 915 estates holding business assets and up to 185 estates claiming agricultural property relief (HMRC, reference year 2026 to 2027, as at July 2026, subject to change).
| Group affected, 2026 to 2027 | Estates (up to) | Source |
|---|---|---|
| Estates holding business assets (BPR) | 915 | HMRC, 2026 to 2027 |
| Estates claiming agricultural property relief (APR) | 185 | HMRC, 2026 to 2027 |
| Total estates expected to pay more | 1,100 | HMRC, 2026 to 2027 |
For context on scale, business property relief cost the Exchequer about £1,050 million in 2021 to 2022, of which roughly £185 million related to shares not listed on a recognised exchange (HMRC via gov.uk, reference year 2021 to 2022, as at July 2026). The reform narrows that relief at the top end rather than removing it.
The revenue the reform is forecast to raise
The reforms to agricultural and business property relief are forecast to raise around £140 million in 2026 to 2027, rising to roughly £290 million to £305 million a year later in the decade (HMRC, as at July 2026, subject to change). The figures rise as the change works through more estates over time.
| Tax year | Forecast yield (combined reforms) | Source |
|---|---|---|
| 2026 to 2027 | £140m | HMRC |
| 2027 to 2028 | £290m | HMRC |
| 2028 to 2029 | £305m | HMRC |
| 2029 to 2030 | £295m | HMRC |
| 2030 to 2031 | £295m | HMRC |
Source: HM Revenue & Customs tax information and impact note, gov.uk. Combined figure for both reliefs, as at July 2026, subject to change.
What the numbers mean
Read together, the figures suggest a change aimed at a narrow band of larger estates rather than a broad one. Up to 1,100 affected estates in 2026 to 2027 is a small share of the tens of thousands of deaths each year, and the £2.5 million per-person allowance sits well above the value of most trading businesses (HMRC, as at July 2026).
That said, the impact can be uneven. A family business held mostly in one illiquid asset, such as premises or land, may face a bill that is hard to fund from cash, even where the 50% rate rather than a full charge applies. The move from £1 million to £2.5 million, and making the allowance transferable between spouses, has widened the headroom considerably compared with the original proposal, which is why the estimate of affected estates fell.
A relief that halves above a cap is not the same as a relief that disappears. For most family businesses the question is how much falls above £2.5 million, not whether relief exists at all.
Because the reliefs interact with the nil-rate bands, the standard 40% rate and the specific structure of each business, headline figures rarely map neatly onto a single estate. Many people in this position choose to model their own numbers with a qualified professional before drawing conclusions, and to keep the wider estate planning guide in view rather than looking at one relief alone.
How the £2.5 million allowance works
Where a business is owned jointly by spouses or civil partners, the transferable allowance can matter a great deal, because an unused allowance on the first death may pass to the survivor (gov.uk news, as at July 2026, subject to change). How ownership is structured, and how a will is drafted, can therefore affect how much of the combined £5 million is actually used. These are points many people choose to discuss with a solicitor, a STEP practitioner or a tax adviser.
Scotland and Northern Ireland
Inheritance tax, and the reformed business and agricultural property reliefs, apply across the United Kingdom, so the £2.5 million allowance and the 50% rate above it are the same in Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs is succession law. Scotland has its own rules, including legal rights that can entitle a spouse and children to a fixed share of an estate, and it uses confirmation rather than a grant of probate. Where a business or estate touches more than one jurisdiction, it can be worth taking advice in each.
Sources and methodology
This piece uses published UK government data only. Where a figure could not be confirmed from a named official source, it is not stated. All figures are current as at July 2026 and are subject to change.
- HMRC tax information and impact note, changes to agricultural property relief and business property relief, for the allowance, the 50% rate, affected-estate counts and forecast yield: gov.uk (reference years 2026 to 2027 onward).
- HM Treasury / gov.uk news, inheritance tax reliefs threshold to rise to £2.5m, for the £2.5 million allowance, the £5 million couple figure, transferability, and the 23 December 2025 announcement: gov.uk.
- HMRC via gov.uk, summary of reforms to agricultural and business property relief, for the 2021 to 2022 cost of business property relief and the AIM-shares share: gov.uk (reference year 2021 to 2022).
- gov.uk, Inheritance Tax, for the 40% standard rate and the £325,000 nil-rate band, frozen to the end of the 2030-31 tax year (5 April 2031) - the freeze was extended by a further year at Budget 2025 (26 November 2025), having previously been due to end in 2029-30: gov.uk.
Frequently asked questions
What is the business property relief reform?
From 6 April 2026, business property relief and agricultural property relief share a 100% relief allowance of £2.5 million per person, with qualifying value above it relieved at 50% rather than 100% (gov.uk, as at July 2026, subject to change). The allowance replaces the previous position where qualifying business property could attract unlimited 100% relief.
How many family businesses will pay more inheritance tax?
HM Revenue & Customs expects up to 1,100 estates across the UK to pay more inheritance tax in 2026 to 2027 because of the combined reforms, including up to 915 holding business assets and up to 185 claiming agricultural property relief (HMRC, 2026 to 2027, as at July 2026, subject to change). This is a small share of estates overall.
Was the allowance always £2.5 million?
No. The allowance was originally proposed at £1 million and raised to £2.5 million on 23 December 2025, taking effect from 6 April 2026 (gov.uk news, as at July 2026, subject to change). The higher figure, and making the allowance transferable between spouses, reduced the number of estates expected to be affected compared with the original proposal.
Can spouses combine the allowance?
The £2.5 million allowance is transferable between spouses and civil partners, so a couple may in principle pass up to £5 million of qualifying business or agricultural property between them before the 50% rate applies, on top of the nil-rate bands (gov.uk news, as at July 2026, subject to change). How much is used can depend on ownership and how a will is drafted.
Does the reform apply in Scotland and Northern Ireland?
Yes. Inheritance tax and the reformed reliefs apply across the UK, so the £2.5 million allowance and the 50% rate are the same in Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). Succession law differs, though, particularly in Scotland, so where an estate spans jurisdictions it can be worth taking local advice.
What about AIM and other unlisted shares?
Shares admitted to trading but not listed on a recognised stock exchange, which includes many AIM holdings, move to 50% relief regardless of the £2.5 million allowance (gov.uk, as at July 2026, subject to change). Whether a particular holding qualifies at all can be complex, and many people choose to check the position with a qualified adviser.