BPR + APR £2.5m Cap Calculator (April 2026)
From 6 April 2026, Business Property Relief and Agricultural Property Relief retain 100% relief on the first £2.5m (raised from £1m at Autumn Budget 2024, increased again on 23 December 2025) - 50% relief above that. AIM/unlisted shares get 50% in all circumstances.
Estate inputs
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Unquoted trading-company shares, farmland in own occupation, sole-trader business assets.
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BPR + APR April 2026 rules
- Pre-April-2026 (current): 100% BPR + APR on unlimited qualifying value (trading-company shares + farmland in own occupation + sole-trader business assets). AIM / unlisted shares: 100% BPR.
- From 6 April 2026: 100% relief on the first £2.5m of qualifying BPR + APR property; 50% relief above (effective 20% IHT rate on the excess). Cap is per estate.
- Spousal aggregation: the £5m combined cap applies across BOTH deaths, not as a single-death cap. Draft legislation on whether the unused £2.5m allowance is fully transferable to the surviving spouse on first death has not yet been published - the calculator's "Married/CP" mode assumes full transfer per the policy intent set out in the 23 December 2025 announcement, but the technical implementation may differ.
- AIM + unlisted shares: 50% relief in all circumstances regardless of the £2.5m cap - the 100% rate disappears entirely for AIM/unlisted from 6 April 2026.
- The £2.5m level was announced on 23 December 2025 - up from the £1m originally announced at Autumn Budget 2024.
- Impact per HMG news 23 December 2025: approximately 185 estates claiming APR will pay more IHT each year (down from the 375 originally projected on the £1m cap), and around 1,100 estates in total (combined BPR + APR + AIM) will pay more IHT each year. The £2.5m threshold (vs the original £1m) materially reduces the affected estate count.
Planning implications
- Family business succession. Estates with qualifying business value between £2.5m-£5m benefit most from spousal aggregation - leaving the business to surviving spouse uses both caps over two deaths.
- 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. Worth considering for value above the £2.5m cap.
- AIM portfolio repositioning. The loss of 100% BPR on AIM/unlisted from April 2026 fundamentally changes the AIM-for-IHT-planning case. Many wealth managers have advised reduced AIM allocation.
- Restructuring trading status. BPR requires the underlying business to be trading (not investment). Mixed-purpose companies risk losing relief altogether - review investment-side activity.
Sources
- HMG news - IHT reliefs threshold rises to £2.5m for farmers + businesses (23 Dec 2025)
- HMRC - Summary of reforms to APR + BPR (pre-Dec-2025 policy paper, kept for background context - the £1m cap + non-transferability statement on that page were superseded by the 23 Dec 2025 announcement above)
- Estimate only. Not tax advice. For complex business succession engage a STEP-qualified solicitor + chartered tax adviser.