In late December 2025, the UK Government announced a major change to inheritance tax reliefs that has significant implications for business owners, farmers and family estates. These updates will be introduced from 6 April 2026, and they underline why proactive planning and good tax advice matter now more than ever.
The Basics: Nil-Rate Bands and Current Thresholds
Under the current system, everyone has a nil-rate band (NRB) of £325,000 – the amount your estate can pass on before inheritance tax applies. In addition, the residence nil-rate band (RNRB) adds up to £175,000 if your main home is left to children or direct descendants. Together, a couple can currently pass on up to £1 million tax-free with the right planning.
These thresholds have been frozen for many years and are now fixed until at least April 2030. That means rising property values and asset growth have pushed more estates into IHT territory.
The Latest Changes: Relief Caps Raised
One of the biggest inheritance tax stories going into 2026 is the Government’s decision to raise the relief cap on agricultural and business property – a move widely seen as a response to concerns from farmers and family-run businesses.
Under the previous proposals, Agricultural Property Relief (APR) and Business Relief (BR) – which allow qualifying assets to pass on free of inheritance tax – were set to be capped at £1 million of combined relief. Assets above this level would have been taxed more heavily.
However, following huge backlash and political debate, the Government announced in December that the cap will instead be £2.5 million per individual, meaning spouses or civil partners can potentially pass on up to £5 million of agricultural or business assets without IHT, on top of the usual allowances.
This change was formally included in parliamentary statements and will apply from April 2026, giving many family businesses and farms a much larger tax-free window than previously expected.
What This Means for Your Estate Planning
For many people in Bristol and beyond, these reforms could be a welcome relief – especially if your wealth includes farming land or family-run enterprises. But the rules are complex:
- The increased relief cap only applies to qualifying APR and BR assets.
- Other parts of your estate will still be subject to the standard nil-rate bands and tax rate of 40% above them.
- Planning matters, because how you structure ownership and transfers can affect eligibility.
That’s where tailored tax advice becomes invaluable.
Why You Should Seek Tax Advice in Bristol
Inheritance tax law is not just about passing on wealth – it’s about doing so in the most efficient way for you and your beneficiaries. A good tax adviser can help you:
- Understand how the new relief caps apply to your situation
- Use trusts, lifetime gifts, and other tools wisely
- Make sure unused allowances aren’t wasted
- Prepare wills and estate plans that reflect current law
With thresholds frozen and reliefs changing, now is the time to review your strategy rather than waiting until it’s too late.
Inheritance tax might feel daunting, but the changes taking effect in 2026 offer opportunities for smart planning, especially for business owners and farmers. At Dunkley’s we give our clients the most relevant and up to date tax advice, to help you protect your legacy and take advantage of these new reliefs.
If you’re navigating inheritance tax issues in Bristol or the surrounding area, expert guidance can make all the difference. It’s never too early to start planning – and the landscape is changing fast.
For advice and support on any aspect of your business finances, our experienced team at Dunkley’s Accountants are here to help. Call us on 01454 619900 or email us to book in a meeting at advice@dunkleys.accountants.