Overview
- From April 2026, 100% agricultural and business relief will be capped at a combined £1 million, with assets above the cap qualifying for 50% relief, a change expected to raise about £500 million a year from 2027–28.
- Farmers and family firms are identified as the first to be affected, and the new £1 million 100% relief cap cannot be transferred between spouses.
- Under the seven-year rule, gifts become inheritance-tax free if the donor survives seven years, with tapering rates of 40%, 32%, 24%, 16% and 8% applying if death occurs sooner.
- To qualify for the ‘normal expenditure out of income’ exemption, gifts must come from income, be regular, and not reduce the donor’s standard of living, and HMRC can include ‘gifts with reservation’ back into estates.
- Annual allowances remain in place, including the £3,000 yearly gift allowance, £250 small gifts per person, and spousal transfers are exempt, while some outlets report pensions could fall into the IHT net from 2027, prompting more people to plan gifts.