APR/BPR Inheritance Tax Threshold Raised to £2.5m

The Government’s announcement on 23 December 2025 to raise the Inheritance Tax (IHT) threshold for 100% Agricultural and Business Property Relief from £1 million to £2.5 million is welcome news for many farmers and business owners. Combined with the recent decision to allow the transfer of allowances between spouses, this change enables married couples to shield trading estates worth up to £5 million from IHT. However, despite being more moderate than earlier proposals, the adjustment fails to address the underlying issue of illiquidity in private enterprises. For those still affected, significant tax liabilities could force distressed sales, which may not always be feasible.

The changes also appear to disregard the original purpose of these reliefs to support intergenerational transfers of family businesses in the public interest. With limited tax revenue gains and no comprehensive impact assessment from HM Treasury or the Office for Budget Responsibility, concerns remain about rushed and poorly justified amendments. The lack of consultation, coupled with timing amid negative media coverage of rural policies, raises questions about legislative quality.