What the new £2.5m IHT cap means for you

While this is welcome news, it also makes timely, well-structured advice more important than ever.

From April 2026:

• You will be able to claim 100% APR/BPR on up to £2.5 million of qualifying assets.
• Any qualifying value above £2.5 million will only attract 50% relief.
• The nil-rate band and residence nil-rate band remain unchanged.

For couples, this can mean up to £5 million of qualifying assets can be sheltered, provided they are structured correctly.

If your estate includes valuable farmland, trading businesses, or shares in family-owned companies, this change creates both opportunities and risks.

• Opportunity, because more value can now pass tax-efficiently.
• Risk, because estates exceeding the new cap could still face a sizeable IHT bill if planning is left too late.

With the relief cap increasing, now is a good time to revisit lifetime gifting, spousal ownership, and trust planning to ensure assets are structured as efficiently as possible. It is also a good time to review any governance documents, such as shareholder agreements and partnership deeds, to ensure they support succession planning and do not inadvertently limit valuable APR and BPR reliefs.

A simple example of what the change could mean:

A farming client owning £4 million of qualifying land would now benefit from:

• 100% APR on the first £2.5 million
• 50% APR on the remaining £1.5 million

This leaves £750,000 exposed to IHT, creating a potential tax liability of £300,000, a figure that could often be reduced or avoided entirely with forward planning.

This change creates a valuable planning window ahead of April 2026. Reviewing your position now allows time to implement solutions gradually, rather than reacting under pressure later.

If you would like further advice, please contact our Private Wealth team, who can give further insight into what the change could mean for you.