Overall, the Budget introduced no significant reforms to the existing Inheritance Tax framework.
However, several announcements will affect future estate planning, particularly the continued freeze on key allowances and the forthcoming changes to APR and BPR.
Our Wills, Trusts and Probate lawyers explore the key updates and what they may mean for individuals and families planning ahead.
Frozen Allowances and Updates to APR and BPR
The IHT allowances of the nil rate band (£325,000), residence nil rate band (£175,000) and the 100% allowance for assets subject to agricultural property relief and business property relief (£1 million) will be frozen for a further year, from April 2030 to April 2031. As the value of assets such as property continues to rise, more estates are likely to be caught by IHT charges over time.
The Agricultural Property Relief (APR) and Business Property Relief (BPR) changes, which were announced in last autumn’s Budget, are still set to go ahead. This means that, from 6 April 2026, the value of assets subject to APR and BPR that attract IHT relief at 100% will still be capped at £1 million. A lesser IHT relief of 50% will apply above the £1 million cap.
However, this Budget did confirm that any unused £1 million allowance for the 100% rate of APR and BPR will now be transferable between spouses and civil partners, even if the first death occurred before 6 April 2026. In last year’s Budget, no such transferable allowance was proposed. This will also take effect from 6 April 2026.
Additional points
Unused pension funds and death benefits will also be treated slightly differently for IHT. A deceased’s personal representatives (PRs) will be able to direct pension scheme administrators to withhold 50% of taxable benefits for up to 15 months and, in certain circumstances, pay IHT on the deceased’s estate. Also, if pensions are discovered after receiving clearance from HMRC, the PRs will be discharged from the liability of paying IHT. These changes will take effect from 6 April 2027.
IHT charges on trusts will be capped at £5 million for historic trusts settled by former non-domiciled individuals. This will apply to trust charges from 6 April 2025.
Infected Blood Compensation Payments will attract 100% relief from IHT where the person who was originally infected or affected, and was eligible for compensation, died before the compensation was paid. Living recipients of compensation payments will also be given the opportunity to gift some or all of the compensation payment within 2 years without attracting an IHT charge.
Looking ahead
In the run-up to this Budget, it was suggested that the government might change how IHT applies to lifetime gifting.
For example, it was rumoured that the 7-year gifting rule might be increased to 10 years, or that a cap might be applied to the amount an individual can gift during their lifetime.
Ultimately, no such changes were made in this Budget.
However, this is no guarantee that the lifetime gifting rules will remain the same indefinitely.
If you would like to consider making lifetime gifts in line with your general estate planning, it would be wise to consider doing so before the next proposed Budget in Spring 2026.
Contact Our Inheritance Tax Planning Experts
If you would like tailored advice on how these IHT changes may affect your estate planning, please contact our Wills, Trusts and Probate team today.
0161 941 4000
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Darren Christopherson-Smith
Solicitor
Darren joined Myerson in September 2025 as a Paralegal in the Wills, Trusts and Probate team and qualified as a Solicitor in November 2025.
Darren began his legal career after sitting his A-Levels, joining SAS Daniels LLP as a Legal Apprentice in August 2016. He qualified as a Paralegal in 2018 and started the Solicitor Apprenticeship in September 2019, which he completed in the summer of 2025. During the Solicitor Apprenticeship, Darren graduated from the University of Law with a First Class LLB in Legal Practice and Skills before taking the SQE.
Darren initially worked in Litigation before transferring to Private Client in January 2021. Since then, Darren has developed his knowledge and experience of various areas of Private Client law, including probate and estate administration, Wills, lasting powers of attorney, Court of Protection, and the registration of trusts on HMRC’s Trust Registration Service.
About Darren Christopherson-Smith