Inheritance Tax: Lifetime Gifting Is ‘Priority’ To Mitigate Imminent Changes

Business owners and farmers are being urged to prioritise lifetime gifting of qualifying assets into trust before 6 April 2026 - and not wait until the Agricultural Property Relief (APR) and Business Property Relief (BPR) legislation is finalised next month.

The call to action from Irwin Mitchell’s Private Client Advisory team comes with less than 12 weeks to go until the new rules start and follows conversations with farm and business owners across the UK.

The firm says that despite recent modifications to raise the imminent cap on 100% relief to £2.5m and allow spouses and civil partners to benefit from a combined £5m threshold, there is still significant anxiety about the upcoming cap and its threat long term business continuity.  

Helen Clarke, Partner at Irwin Mitchell Private Client Advisory, said:

“Since being announced in the 2024 Autumn Budget, owners have been bracing for a cap on relief whereas assets could previously pass at death free of both IHT and CGT.

“When it comes to APR and BPR, there’s a short but critical window of opportunity which will end on 5 April 2026. Until then, it remains possible to transfer an unlimited amount of 100% qualifying assets into trust without an entry charge ahead of the cap being introduced. Where appropriate and if done properly, this can substantially reduce future IHT and protect the business for the next generation.

“February will be too late to embark on this exercise which like all legal and tax planning needs careful consideration. Business owners and farmers should seek expert advice about their options now, not after the legislation lands.”

Specialists at the firm say whilst some may risk taking decisive action too late, others may find themselves having acted prematurely.  Many, for example, have made significant outright gifts of business and farm assets, transfers they may not have needed to make and would not have contemplated had the cap been set at £2.5m when the reforms were first announced - surrendering control, incurring costs, and possibly creating new tax exposures in the process. It is warned that unwinding those steps, as some may be tempted to do, can trigger fresh charges and legal complexity, and specialist advice is essential.

Irwin Mitchell adds another note of caution, stating that ‘staying under the cap’ is not an effective strategy as eligibility can move with land values, profitability and market conditions

In the Autumn Budget 2024, Chancellor Rachel Reeves proposed that from 6 April 2026 only the first £1m of combined APR/BPR would keep 100% relief, with 50% relief thereafter, and BPR on certain ‘not listed’ shares would be cut to 50%. Following feedback, the government  said unused allowances will be transferable to a surviving spouse/civil partner. Later in 2025 (23 December 2025) the 100% relief allowance was set at £2.5m rather than at £1m as originally proposed.