BPR + APR £2.5m Allowance Calculator: April 2026 IHT Impact
Inheritance Tax impact of the April 2026 BPR and APR reform: 100% relief on the first £2.5m of qualifying property, 50% above, spouse transfer.
Estate inputs
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Unquoted trading-company shares, farmland in own occupation, sole-trader business assets.
Not the same as unquoted private-company shares, which go in the field above and do get the 100% allowance.
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Assumes the home passes to direct descendants; otherwise enter 0.
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BPR + APR April 2026 rules
- Before 6 April 2026: 100% BPR + APR on unlimited qualifying value (trading-company shares + farmland in own occupation + sole-trader business assets). AIM and unquoted shares alike: 100% BPR.
- From 6 April 2026 (now in force): 100% relief on the first £2.5m of qualifying BPR + APR property; 50% relief above (effective 20% IHT rate on the excess). The allowance is per individual and runs on a rolling seven-year basis, so lifetime gifts relieved at 100% use it up (IHTA 1984 s.124D). Trusts have a trust allowance capped at the same amount, but it is built from the settlor's own allowance and capped per settlor (s.124H), so it is not a free second allowance.
- Spousal transfer: any unused allowance transfers to a surviving spouse or civil partner, so a couple has £5m of qualifying property at the 100% rate across both deaths. This is enacted, not proposed: Finance Act 2026 section 65 and Schedule 12 insert a new Chapter 2A into IHTA 1984 providing for the transfer. Where the first death was before 6 April 2026, a full £2.5m allowance is assumed available to transfer. The transfer has to be claimed by the survivor's personal representatives (s.124F).
- Shares designated "not listed": 50% relief in all circumstances, outside the £2.5m allowance entirely. This is the category AIM shares fall into, along with qualifying shares on foreign exchanges that are not recognised stock exchanges. It does not include unquoted private trading-company shares, which keep the 100% rate within the allowance.
- The £2.5m level was announced on 23 December 2025 - up from the £1,000,000 originally announced at Autumn Budget 2024.
- HMRC forecasts up to 1,100 estates paying more Inheritance Tax in 2026 to 2027: up to 185 claiming agricultural property relief, and up to 915 claiming only business property relief, of which around 700 are expected to hold only shares designated as "not listed". Around 85% of estates claiming APR are forecast to pay no more than before. HMRC calls these static estimates that assume no behavioural change, so a maximum.
Planning implications
- Family business succession. Estates with qualifying business value between £2.5m and £5m benefit most from the spousal transfer - leaving the business to a surviving spouse is spouse-exempt, so the first allowance is not used and passes to the survivor (it must be claimed).
- Lifetime gifts (PETs). Gifting business interests during life triggers the 7-year clock - if the donor survives 7 years the gift falls out of the estate entirely. If the donor dies within 7 years, the gift is relieved out of the same rolling £2.5m allowance (s.124D), leaving less for the estate, and relief also needs the recipient to still hold the property (ss.113A, 124A).
- AIM portfolio repositioning. The loss of 100% BPR on "not listed" shares from April 2026 halves the relief that AIM portfolios held for IHT planning were built around: the whole holding now carries an effective 20% rate.
- Trading status. BPR is not available where the business consists wholly or mainly of dealing in securities, land or buildings, or making or holding investments (IHTA 1984 s.105(3)), and excepted assets not used in the business are excluded from relief (s.112). Review investment-side activity in mixed companies.