At the Autumn Budget 2024, the government announced its intention to reform the inheritance tax (IHT) reliefs APR and BPR with effect from 6 April 2026.
The changes include:
- introducing a £1 million allowance for APR/BPR at 100%. The full rate of relief will apply to the combined value of property qualifying for APR and BPR up to the amount of the allowance; and
- setting the rate of relief at 50% for:
- value qualifying for BPR/APR in excess of the £1 million allowance; and
- shares traded, but not listed on the markets of recognised stock exchanges.
The government has now published a technical consultation on the £1 million allowance for property settled into trust qualifying for 100% APR or BPR. Property that currently qualifies for 50% APR or BPR will not use the £1 million allowance.
The consultation:
- explains how the changes will work for transfers made on or after 6 April 2026;
- seeks views on:
- transitional provisions for transfers made before 6 April 2026; and
- the introduction of an anti-fragmentation rule for trust property settled on or after 30 October 2024;
- sets out how the announced changes will apply to special trusts, including qualifying interest in possession trusts and beneficiaries of age 18 to 25 trusts; and
- announces that, from 6 April 2026, the option to pay IHT by equal annual instalments over 10 years, interest-free, is available to all property which is eligible for APR or BPR.
The consultation will close on 23 April 2025. ICAEW will be responding to the questions raised in the consultation. Please send any comments that could inform this response to katherine.ford@icaew.com. The government will publish a response document and carry out a technical consultation on draft legislation for these changes later in 2025.
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